Investing and Global Finance News

Monthly Archives: June 2011

No Dive for Denmark

Europe: Top Marks for Denmark

In an editorial by Allister Heath in City AM wrote in a recent editorial, that, perhaps somewhat surprisingly (or extremely actually damn right shocking), it seems that today, Denmark has become “Europe’s pioneering financial reformer.” This, Heath believes, comes with an important financial message for those who want to become more in-the-know otherwise there could be real trouble as is already happening a bit. First, small lender Fjordbank Mors has gone bust and its senior bondholders are being hit bad with shareholders losing everything left and right and management out on their ears. It seems like none of this is impacting the taxpayer though; good news for them, bad for the money lenders.

New Denmark Laws

So why is this happening? Well, first it’s important to note that it’s not the first occurrence; according to Heath, its’ the second time following the country’s “new resolution procedures designed to allow an orderly, controlled failure of banks and thus reintroduce profit and loss discipline into the industry.” Heath has been arguing for this to happen globally for years. What’s new now is that bank bondholders across Europe are no longer getting government protection (finally, since that was kind of crazy). It became very easy to get a bank debt since there were no risks involved which ultimately enabled “shareholders to borrow cheaply and hence to enjoy an implicit subsidy.” In addition, it was found that credit providers could care less about banks’ risk taking. But it looks like this situation is finally changing. Now, only there will only be protection for the first £85,000 that’s deposited in a UK bank; more than that will be lost.

Dissenting Danish Bankers

It’s not so great for Danish bankers though who are now whining about the fact that their financial expenses have substantially increased simultaneous to credit rating agencies “assuming a larger risk premium.” But okay, it’s not the end of the world; it’s time this issue was faced in a realistic way without relying on government guarantees. Heath believes that this should ultimately result in a “better allocation of resources, a more rationally managed financial sector and correctly priced credit, reducing the risk of bubbles.” There has probably been “too little capitalism, not too much” and thus there is a need for reforms to be made to make sure that even the bigger banks “can be weaned from state guarantees and subsidies.” As Heath concludes, should this happen, it “will be great news for the City’s long-term prospects if the Danish experiment succeeds.”

Italy’s Got Wham’s Jitterbug

Instability in Italy’s Investments: Blame Game Greece They say that George Michael of Wham! fame had some Italian in him…or was it Greek? No matter since both countries seem to be in on this latest financial debacle. And that might not be so far from what’s happening with the Italian financial markets as of late.… Continue Reading

Wall Street Wash

Last Friday, for a third consecutive day, Wall Street plummeted. According to a Reuters report by Edward Kurdy, this was due to “worries about the Italian banking sector and Greece's debt crisis.” Despite this, the S&P 600 still had its “200-day moving average in a sign buyers still see value.” Still, all was not smiles… Continue Reading

The Return of the Millionaire

Global Financial Crisis Ending It seems like the global financial crisis is coming to an end finally. The count of millionaires is increasing once more. According to the World Wealth Report, levels last year increased by 8.3 percent to 10.9m and America seems to home to a lot of these, ranking one percent of the… Continue Reading

Greece’s Debt Crisis

Greece Causes Problems for Eurozone In a recent article, it was reported that Didier Reynders, Belgian’s Finance Minister, feels that Greece’s debt crisis is so bad that it could actually spread “as far as France.” He said that should Greece be the “first country to default,” people will start looking towards places like “Ireland, Portugal,… Continue Reading

Ireland and Financial Stability

Financial stability can trace back a long way, according to an article today in the Irish Times. Indeed, the September 2008 unilateral bank guarantee from Ireland was, according to EU commissioner Joaquin Alumnia, what “trigger[ed] subsequent EU-level actions to preserve Continent-wide financial stability.” Alumnia’s Criticisms Alumnia was addressing a group of bankers yesterday in Dublin… Continue Reading

Greece and Europe’s Crisis

Violence Emerges in Athens In an article by Louise Armitstead, it seems that Europe’s debt crisis is getting out of control in more than just financial ways. Just two days ago the Athens parliament was subject to a violent outburst while the capital’s politicians discussed “savage spending cuts.” The people outside were less than happy,… Continue Reading

Canada’s Complications: Economy Issues

Canadian Job Market Earlier this week, the parliamentary budget watchdog in Canada said that the “job reductions within the bureaucracy, as presently planned, won't be enough to meet austerity targets the Conservative government has established.” Budgetary plans for next year and the future were also reviewed. It was found that by fiscal 2014 an anticipated… Continue Reading

Financial Femme Fatale?

If Christine Lagarde – who was yesterday put on the shortlist to head the International Monetary Fund – succeeds, she will be “the first woman to head the global emergency lender.” She has a pretty good chance too, in the way she has been handling the world economic crisis until now. Once Dominique Strauss-Kahn handed… Continue Reading

US Economy’s Impact on Global Finances

World Bank economist Andrew Burns commented on America’s recent weak economic data, noting a significant slowing down of US economic growth. However he said that it was unlikely that the US would experience a “double-dip recession.” In terms of Europe, the recovery is somewhat stalling also vis-à-vis various crises in different areas, most notably Ireland… Continue Reading