Friday’s selling spree wiped out any gains made in July for both the Dow and the Nasdaq.
Investors are taken by fear and worry over the European financial position according to Frank Fantozzi, president and senior adviser at Planned Financial Services.
See U.S. stocks fall as Europe fear overrides earnings – MarketWatch.
Euro crisis far from over, stock analysts warn
By PAUL WISEMAN and JOSHUA FREED
Violent protests in Greece
WASHINGTON (AP) — A slim victory for the main conservative party in an election in Greece should relax fears that a country will stop using the euro for the first time and possibly unleash global financial turmoil.
But when it comes to Greek politics – and European economic policy – it’s never that easy. So the bumpy ride for financial markets isn’t over yet.
The former UK Prime Minister Gordon Brown has spoken ahead of next week’s G20 summit in Mexico, about the prospect of a required bailout for Italy and France. Gordon Brown has called for the G20 to begin to draw up a “concerted global action plan” to deal with the crisis.
This comes after German Chancellor Angela Merkel, attacked the French President Francois Hollande for allowing the French economy to stall. She also echoed Mr Brown’s comments, warning that Hollande’s socialist policies could lead to France being enveloped by the debt crisis.
Last year, when officials began to speak of the contagion spreading to Italy and Spain, no solid measures were put in place, and now we are on the brink of Spain requiring a full bail-out (the bailout currently under consideration is only to bailout their struggling banking system). Spain and Italy were both labelled at the time as “too big to fail”. At that time the thought of a French bailout was unthinkable.
However, it is expected that the summit in Los Cabos, Mexico, will see world leaders continuing to pressure Chancellor Angela Merkel to agree to Eurobonds. Mrs Merkel has left Germany for the summit, remaining steadfast in her tough austerity stance – in the face of French opposition from Francois Hollande, and with President Obama also backing the new French President.
Germany rules out instant euro fix
Germany dashes eurozone expectations France seeks eurozone stability package In depth Eurozone in crisis
Nokia to shed further 10,000 staff
Shares fall 8% as handset maker warns on losses
Nokia poised to sell Vertu line Nokia Struggling to regain investors’ confidence Ups and downs Facebook shines as Nokia fades away
GLOBAL MARKET OVERVIEW from MARKETS 11:26am
Stocks dip as eurozone fears persist
Spanish yields briefly spike above 7% after Moody’s downgrade
Video Eurozone just needs time Martin Wolf A new form of European union Wall Street edges up on stimulus hopes
From COMPANIES 7:49pm
Banks bow to EU over limit to bonuses
Payouts set to be made relative to salary
Sustainable Banking and Finance John Gapper Excessive CEO pay rarely rewards investors Big UK funds urge rethink on incentives
via FINANCIAL TIMES
Euro zone finance ministers agree to lend spain 100 billion euros Madrid said it’s enough. Spanish government requested European financing to recapitalize Spanish banks.
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.
next >
< previous
Economists in Europe now believe the French banking system is days away from requiring re-capitalization, and the Italian banks are not far behind them.
French banks have massive exposure to the European debt crisis, in particular to Greek debt. One of France’s biggest banks, BNP, alone has a eurozone sovereign debt exposure of some €75bn, amounting to roughly 6% of total assets, including €14bn of Greek debt and €21bn of Italian government bonds.
There is continued speculation that the Germans will kick the Greeks out the Eurozone; if this happens Greek debt will be worthless, and the banks will lose their money.
The whole problem is compounded by the lack of clear understanding about how to deal with the crisis as a whole. So far measures have been more like a sticking plaster on a gaping wound, as the victim slowly bleeds to death. Politicians from every European nation have failed to grasp the enormity of the problems they face, and no viable solution has presented itself. This week Barak Obama, as well as the Chinese Premiere, have urged the European leaders to take more responsibility for the crisis and to take decisive action in order to stablize the markets.
Although these issues may all seem very distant – affecting Continental Europe, the Europe problem is the biggest factor influencing global markets at this time. If a sustainable solution is not found and implemented it will not only be the European economy that will crash, it will crash the global economy. This is a time when developed nations have nothing left in their economic arsenal to fight off economic armageddon 1931 style.
With the difficulties facing Europe one could say a miracle is needed. Certainly to steer Europe safely through this crisis, wisdom and conviction are essential on a Biblical scale. We have just witnessed what happens when the mantle on Prophet TV enters a region, in New York hurricanes changed course as soon as the mantle entered the city. Prophet TV has many testimonies of the power on this ministry, to turn economic catastrophe around. This time more than any other, we need God to intervene and show the way ahead. Confidence and faith needs to be returned to Europe, and wisdom prevail in the leaders of the nations of Europe. Support Prophet TV, so these giftings can be brought back into Europe.