Global Roundup

On the global economic and financial front, despite the decrease of jobless claims in America and better spending by the consumers, the overall situation remained negative. In the forefront, the financial woes of Ireland have unsettled the entire banking and fiscal system of Europe with pointers that Portugal and Spain are poised to go down the same slippery path. Therefore from Iceland and Ireland to Greece, Portugal, Spain and other countries in the southern periphery of Europe, sovereign debts accompanied by gross mismanagement, speculation and malfeasance have shaken up the Euro, the so-called single currency. Only Germany seems to be floating high.

However, Chancellor Angela Merkel has opinionated that the private sector also has the duty to chip in and help stabilise a highly wayward financial situation in several Eurozone countries. Merkel's proposal has brought lot of criticism. Thus the fiscal fortunes of Europe continue to wobble interminably leaving little apparent hope for even a modicum of social and economic stability in Europe. Now fears have arisen that economic crises presently prevailing in Europe and indeed around the world are threatening to unravel and undo the very foundations of human civilisation itself.

The dollar went up against most of its major counterparts after North Korea and South Korea exchanged artillery fire, encouraging demand for the greenback as a refuge. Last week, China increased bank-reserve requirements following the fastest rise in consumer prices in two years.

(Image source: Worldbunkering.com)

Economic Round-up

 America’s Federal Reserve kept interest rates at a level close to zero. The Fed’s accompanying statement, which markets were keenly awaiting for any sign of a shift in policy, reiterated its intent to keep rates “exceptionally low” for an “extended period”.

 The Bank of England decided to inject a further £25 billion ($42 billion) into the British economy through its quantitative easing programme, raising the cumulative total to £200 billion. The extra asset purchases will be made over the next three months, a slower rate than before.

 At a conference in London several leading bankers criticised new proposals for regulating banks that are “too big to fail”. Josef Ackermann, head of Deutsche Bank and chairman of the Institute of International Finance, defended large banks as the “most efficient” means of providing financial services to multinationals.

 In an effort to diversify its foreign reserves, India bought 200 tons of gold from the IMF during October, which will nudge the country into the top ten gold-holders worldwide. The news sent the price of gold to another high.

 UBS made an unexpected loss in the third quarter, as net outflows from clients mounted in its private-banking business. The Swiss bank earlier this year reached a settlement with American authorities over “secret” accounts.

 CIT, a lender to small businesses, filed for bankruptcy protection under a reorganisation plan that had been accepted by most of its bondholders. The move was widely anticipated as CIT struggled with $30 billion in debt, which its restructuring will reduce by a third. The company received a $2.3 billion bail-out last year—money that is now unlikely to be returned to taxpayers.
(From The Economist)