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Danes Change Banking Rules to Allow Negative Rates on Bank Accounts

In Denmark the banking rules have changed to allow negative rates for accounts with a surplus of $100,000 or more. Previously negative rates could only apply to account with more than $1million.

The change will effectively see the banks charging people to hold their money. The countries of Europe are watching with interest, ready to learn from Denmark’s experience.

“So far, it’s just been a lot of theories about what will happen, but now we get a chance to see it in real life,” said Jan Storup Nielsen, a senior analyst at Nordea,. “For the rest of Europe and the ECB this is perfect, because they can let Denmark learn all the consequences and then see what they should decide.”

Low interest rates have seen householders borrow more money, but they have also been saving a lot as well. Low interest rates are often accompanied by inflation, however this has not been seen in Europe. Thus allowing householders to gain from the low rates; without  the usual pain.

Read More: Yahoo Finance

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CYPRUS SECURES THE €10 BN BAILOUT IT REQUIRES TO AVOID BANKRUPTCY

In a last minute deal Cyprus managed to secure the €10 bn bailout it requires to avoid bankruptcy. The Cypriot parliament agreed on a deal which will see bank deposits over €100,000 taxed. The troubled Laiki Bank will also be wound up, and split into two parts a “good” bank and a “bad” bank. The largest Cypriot bank, the Bank of Cyprus, will undergo major restructuring. Deposits in the Bank of Cyprus over €100,000 have now been frozen.

It is believed the levy on bank deposits will be around 30%. The Cypriot finance minister said they were keen to protect individuals and small depositors. The majority of account holders with over €100,000 are wealthy Russians. The deal has angered Moscow, who have accused the eurozone of using the crisis to go after Russian money.

Laiki and Bank of Cyprus remain closed with ATM withdrawals limited to €100 a time.

Read More: BBC

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CYPRUS BAILOUT DEAL MAY SEE BANK ACCOUNTS TAXED

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The small European island nation of Cyprus faces bankruptcy if they do not receive a €10 billion bailout from Brussels. However, part of the bailout deal under discussion will see a one off levy on all bank savings. The deal will see small saving up to €100,000 taxed at 6%, and deposits over €100,000 taxed at nearly 10%.

The proposals have angered Cypriots who feel betrayed by Brussels and their government. Many see the levy as a way for the eurozone to access the vast deposits in Cyprus made by wealthy Russians. As well as the proposed bank account tax Cyprus also faces the same strict spending cuts and tax hikes Greece has experienced as part of their bail-out deal.

The Cypriot government was due to vote on the bail-out package today, but the vote has been postponed until tomorrow, over fears the government would lose the vote.

The uncertainty caused by the bailout deal has seen markets slide across Europe and America and many have argued that a tax on savings will see investors pulling their money from Europe in general.

Banks in Cyprus will remain closed until Wednesday, over fears of a run on the banks, as people have been withdrawing as much as they can from ATM’S over the last 24 hours.

Read More: BBC

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Debt crisis: Spain ‘will need extra bail-out’ – Telegraph

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It is thought Spain’s banking sector will require another bailout of more than more than €100bn.

Spanish banks face a record number of bad debts with 1 in 10 loans in arrears.

Spain already received €100bn in June to recapitalise it’s banks, but at the time many economists warned the amount was not sufficient and it would only be a matter of time before Spain required more cash.

The political mood in Spain is also deteriorating with the Catalonian region threatening to break away from the rest of Spain because of the financial crisis and the austerity measures.

via Debt crisis: Spain ‘will need extra bail-out’ – Telegraph.

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Greece Could Fall in Days as There is a Run on the Banks

Greece have set the date for re-run of elections of June 17th. The recent Greek elections ended in chaos, with none of the parties able to form a workable coalition. However, the new fear is that Greece will not make it to June 17th.

Since the failed elections Greeks have been taking what money they can out of the banks. Companies are moving their money overseas, as fear grips the nation. If this continues, the country will run out of cash and the system will collapse.
If that happens, then Greece will exit the Euro in an un-orderly fashion. Some economists say a Greek exit could cost $ 1 Trillion. The contagion in the markets would likely result in Italy and Spain failing shortly after.

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Eurozone Debt Deal…


At the much anticipated meeting of European Union heads of state in Brussels a deal was reached to hopefully solve the continuing debt crisis threatening the world economy.

Leaders agreed that the European Financial Stability Facility (EFSF), used to bailout nations like Greece when they are in trouble, has been increased to €1 trillion. Leaders also managed to reach a deal which will see a Greek debt haircut of 50%, and a plan was also reached to recapitalize the European banks. The problems in Italy were also discussed, with Italian Prime Minister Silvio Berlusconi giving assurances to the EU meeting, that his government will continue with it’s austerity drive and will seek to have a balanced budget by 2013.

When the deal was announced global stock markets rose at the signs that action had finally been taken. However, it very quickly became apparent Europe was by no means out of the woods. The deal is very short of detail. Nothing was said about how the EU will find the €1 trillion required for the EFSF and since then EU officials have been in talks with China to raise the loan. It was agreed that the fine detail of how to raise the money would be discussed at the next EU summit of leaders in December.

Furthermore, despite stock markets rising on the news, the global bond markets did not follow. The bond markets treated the deal with a great deal of caution. Since it is the global bond markets that lend to governments this is not a good sign. Put simply, investors are not investing in Europe, it is too high risk. If bond markets stop lending to large western economies, it means public sector wages go unpaid, schools close, and hospitals run out of cash. This would result in  serious civil unrest.

As for the recapitalization of the banks. When the details were looked at it was found the amount agreed upon is woefully inadequate. Analysts at Credit Suisse, after looking at the figures, concluded that this is not really a bank recapitalization at all. The recapitalization was so important because the banking sector in Europe makes up a significant proportion of GDP. If the banks fail, and require sovereign nations to bail them out it will be very difficult, and would likely have a snow ball effect on that nations credit rating. This is a particular problem for France, whose banks have a high exposure to the Greek debt.

The haircut for Greece also comes with undesirable consequences for Greece. They are to have EU officials installed in Athens, who will not oversee the running of their economy, in effect Greece has lost her economic sovereignty. This is the fate of any nation now, that requires a bailout.

With the recent attention being given to Greece and Italy, we cannot forget Portugal. Portugal is beginning to show the same signs that Greece had before it went into financial meltdown.

Behind all the deals and negotiations are the citizens of Europe, who are becoming increasingly angry at the whole affair. Solvent nations are seeing their citizens angry that they are having to bailout out the wrongs of others, and those nations in financial difficulty are seeing increased civil unrest due to the crippling austerity packages put in place. Across Europe nationalism is growing.

The deal may succeed, but there are a lot of factors at work which could cause it to unravel very quickly. This is not a time for us to be putting our faith in the politicians to find a solution; It is the time to support the work of Prophet TV, to enable the missions in Europe to continue. Economic meltdown need not happen, but we must protect Europe to ensure that it doesn’t.

 

 

 

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