Economic Analysis and Indicators

European shares rebounded Friday after several sessions of decline, especially after a Reuters information that the Member States of the European Union are considering, as part of the future permanent mechanism for stability of the euro area, to give to involve the private sector in the financial rescue of a country.

This discussion is part of wider ongoing trade reform on the European Treaty, on which Nicolas Sarkozy and Angela Merkel agreed Thursday in Strasbourg, it was said sources familiar with the matter.It does not however affect the participation of banks and insurers in the second EU aid package to Greece, where they pledged to remove 50% of their claims to the country.

The information bounces European markets, which operated in the red after a disappointing auction of Italy.

Democrats and Republicans were unable to agree on a plan to reduce U.S. debt, which has just reached 15,000 billion. The reasons and consequences of this blockage. The President of the United States Barack Obama

Another failure of the Congress on U.S. debt. The "super-committee" responsible for reducing the debt of the United States announced Monday does not come to an agreement between left and right, after two months of effort. Congress had established a commission charged in August to decide on a plan to reduce debt. Composed of twelve members of Congress – six Republicans and six Democrats – the "super-committee" had a debt relief that comes from abyssal exceed 15,000 billion (you can see it evolve in real time on the site www.usdebtclock. org). The twelve were elected and agree on a plan to save 1,200 billion over ten years.The six Democrats proposed a plan for 2900 includes 1,300 billion billion tax increase, the six Republicans on the other hand opted for a plan of 2,200 billion euros, with "only" 200 billion of tax increases. Never reach a consensus after two months of negotiations.

Why the lock?

This blockage occurs less than a year of presidential elections scheduled for November 2012. "We are fully retracted into the political debate for 2012, especially with the right wing of the Republican Party who has taken a lot of power in the party," said Christine Rifflart Economist at OFCE. "And the Republicans have an interest in playing the firmness vis-à-vis Barack Obama that it is out of question to pass up the deficits."

For it is these Republicans who blocked the process.

European shares are stepping up their gains, resulting in the CAC 40 index beyond the resistance of 3,300 points in markets relieved after the agreement reached in the night on the Greek debt restructuring, capacity building fund support the euro and the recapitalization of European banks.

In Paris the CAC 40 is doped by the bank and Axa, up 12%. At the top of the index, Crédit Agricole flies by 21%.

Dexia wins more than 10% at the resumption of trading of the security.Constraint to the dismantling early October due to the debt crisis in the eurozone, the bank said Thursday that its capital requirements amounted to 1.7 billion euros.

PPR takes more than 6%, boosted by the announcement on the eve of a very strong sales growth in the luxury market in the third quarter despite a difficult economic environment.

The euro peaked at 7 weeks against the dollar at 1.4038. Traders refer to a new level of resistance around 1.4050 dollar.

Beijing could become an important contributor to the relief fund of the euro according to European diplomats. The use of third party investors will be part of discussions at the EU summit this evening. Chinese Premier Wen Jiabao at the "Forum Summer Davos" in Dalian City, September 14, 2011.

China is ready to replenish the European Financial Stability Fund (EFSF), the main instrument to stem the debt crisis in the euro area, said European diplomats Wednesday before a summit of EU leaders in Brussels. "China is to" replenish the fund by creating an autonomous investment ("spin-off"), said a diplomat speaking on condition of anonymity. Other emerging powers (Brazil, Russia, India, China, South Africa) have "not yet" indicated whether they participated in the fund, he added.

Argentina has made clear it would not participate in the rescue of the euro area, said another diplomat. The diplomats did not specify how high should reach the participation of China. The Director of EFSF, Klaus Regling, is expected in Beijing Friday, after the summit, also announced the Delegation of the European Union in Beijing.

The spokesman for the Chinese Foreign Ministry, Jiang Yu, said Wednesday that China had "an open mind" and would "talk to the Europeans of many ways to cooperate." China has reiterated several times in recent weeks support for the euro area. It was unclear what would be the interlocutors in Beijing by Mr. Regling and no official was immediately available to the Ministry of Finance or the central bank.The Heads of State and Government EU could decide Wednesday night to extend the Emergency Fund of the euro area to external investors.

The markets expect strong action from the summit of heads of state and government of the Monetary Union in Brussels, which will open in the evening after a summit of 27 countries of the European Union. But hopes of a big deal are slim because of persistent differences between Europeans. EU leaders must avoid at all costs including the contagion of the Greek debt to Italy and Spain, especially by finding a way to increase the firepower of the EFSF, with a capacity of 440 billion deemed insufficient to meet the crisis.

On Wednesday, the China Daily said that emerging markets and including China agreed to participate in a European relief fund via the International Monetary Fund (IMF). Citing an unidentified source "close to the European decision-makers," the newspaper stated that "the agreement (the emerging) could be included in the final document of the summit of European leaders", if the Brussels summit decides to open the fund to of external public and private investors. In this case, China, which already holds some 500 billion of European sovereign debt, according to French and German experts, and is sitting on a huge cushion of foreign exchange reserves of 3,200 billion, would be well positioned to invest in the EFSF.The EFSF must be reinforced, either by him to carry the debt issued by European countries, either through an expansion of the means at its disposal, including through the use of outside investors.

French banks have agreed to increase their capital to 9% as part of a coalition agreement with Germany to establish a common position before the G20 summit, said on Tuesday Foreign Minister Alain Juppe during the question session in the National Assembly.

"In the case of French banks, they undertake to get their share capital to 9% of their balance sheets (…) instead of 7% expected in 2013," he said in response to a member of his asking about the basis of the agreement to be reached between Angela Merkel and Nicolas Sarkozy before the G20 3 and 4 November.

"This will be achieved by mobilizing the income of banks themselves, who earn money, private capital and if necessary, ultimately, public capital," he told the National Assembly.

France and Germany have pledged Sunday to respond "lasting and comprehensive peace" to the crisis in the euro area for the G20 summit scheduled for early November in Cannes, which will include a recapitalization of banks in Europe.

Met for crisis talks in Berlin, Nicolas Sarkozy and Angela Merkel said they would formulate joint proposals to do so while refusing to give any details at this point.

"You will see the end of an entire fully functional," promised the Chancellor during a press briefing.

Nicolas Sarkozy for his part stressed that Europe should "have solved its problems by the G20 to Cannes," several members of the forum, including the United States, having recently expressed concern over the inability of Europeans to stop the crisis caused budget problems for Greece.

French and German leaders welcomed the fact that almost all European countries have ratified the Second Plan aid to Greece adopted July 21, which also expands the powers of the European Financial Stability Fund (EFSF), the fund urgency of the euro area.

While starting to speak out to condemn the new plan to help poor, they said they expected the report of the troika (EU-European Central Bank and International Monetary Fund) on the situation in Greece before any decision.

"We believe that the troika will be able to submit a sustainable solution for Greece, a member of the euro," said Angela Merkel predicted.

AGREEMENT "SOLD" ON THE BANKS

The Chancellor and the President also discussed the recapitalization of banks in Europe, an issue that has emerged under the pressure of the markets, concerned about the resilience of the banking system facing the European financial and economic crisis due to its exposure to country the worst off.

The first said that Paris and Berlin were "determined to do whatever it takes to ensure the recapitalization of our banks."

French President for his part assured that the agreement between the two countries on how and where the process was considered "complete", denying the reports of differences over the use of EFSF to provide the necessary funds.

While capital needs of European banks have been estimated between 100 and 200 billion dollars by the IMF, Merkel said that the new European Banking Authority and the International Monetary Fund would be asked to ensure that what is proposed is "durable and strong."

Nicolas Sarkozy referred to "a meeting (held) at a date to be fixed for the detail of what we do."

He said other than France and Germany were preparing a number of adjustments to the Treaties to strengthen European integration in the euro area.

The head of the French government has finally responded to those who, like the World Bank President Robert Zoellick, to accuse European leaders lack the vision that inspired their predecessors, stressing that it was now not to build projects, but to make decisions in a crisis without precedent.

"It is precisely because at that time there were grand visions that have failed to address issues that were not the details that we are now both in managing the crisis and solve problems that should have been solved before, "he said.

"Everyone knows, Europe has chosen the single currency without even thinking about what his government would be economic, not to think about the issues of harmonization of fiscal and economic policies and we have now in crisis response these problems. Well, we are determined to do it! "

Gold has dropped more than $ 100 Friday to rally against the dollar and rumors of liquidation of positions by large hedge funds.

The future of money, which attracted even more speculation over the past year, have come down by 18%, their biggest drop since 1987.

The fear of recession and the worsening of the Greek crisis prompted investors to process the precious metals it like any other commodity. The next risk-free investment that benefited the gold this year has suddenly disappeared in the last two weeks. Gold then began to decline in parallel with actions.

In two days, gold has lost nearly 9% and silver up to 25%.Despite its decline, gold, which reached a record 1,920.30 dollars per ounce earlier this month, is up 16% since the beginning of the year.

End of the session, the spot price of gold was down by 5.5% to 1,641 dollars an ounce, down $ 127 for ever.Percentage (more than 6%), this is the biggest drop since the 2008 financial crisis.

On the futures market in the U.S., the December contract on Comex ended down 6% or $ 101, less than 1640 dollars an ounce.

Money spotlight fell by 14% to hit a low of seven months under 31 dollars an ounce.

Traders blamed the fall of the gold distress sales made investors increasingly nervous about the turmoil in the credit market and seeking to cover losses on other asset classes, particularly in the market actions in a sluggish economy.

"There are many people who say that it is the margin calls on other assets, but I rather think that panic here and there," said Matthew Turner, precious metals specialist at Mitsubishi Corp. in London.

He emphasized that there is still one month, speculators saw gold as a hedge against inflation when the Federal Reserve seemed about to take further measures to support the economy. But the Fed has finally decided not anticipated the kind of stimulus

"The drop in gold is a little surprising.The fact that he was so erratic lately even discourages purchases decline, "said Peter Buchanan, senior economist at CIBC World Markets.

Finance ministers and central bankers of the G20 countries, meeting Thursday in Washington, pledged in a statement to prevent the debt crisis in the euro area would undermine banks and financial markets.

But analysts say that investors may be waiting to learn more about the evolution of the global economic situation before returning to the gold.

While the downgrade of Greece routinely saddled markets, that of Italy by Standard and Poor's on Tuesday, has not moved many people. The greatest response finally came from Silvio Berlusconi but also to challenge the "political considerations" of the agency. Explanations of Jean-Louis Mourier, economist at Aurel Level. Italian Prime Minister Silvio Berlusconi, Rome January 21, 2011

The U.S. rating agency Standard and Poor's has lowered the credit rating of Italy a notch, from "A +" to "A" due to low growth prospects, which will complicate the reduction of deficit and debt. What are the risks to the Peninsula?

Standard and Poor's is the first agency to downgrade the rating of Italy that had never been lowered since the beginning of the debt crisis, unlike that of other fragile countries in the euro area.The obvious risk is now to see interest rates still further on. The 10-year yields are now 5.67% or a spread with Germany of 3.90 basis points. The level is high but there is, after all, acceptable. Italy can still take the risk of finance markets rather than to appeal to the IMF, the political cost would be much higher.

Do you think interest rates will continue to rise?

All depend on the decision of Moody's, it will take only three months. But in practice the risk of soaring rates is very limited. For now, yields are already very high which suggests that markets for some time had considered this deterioration given the growth deficit of the country and its political instability. Quite honestly the situation in Italy is serious but not catastrophic.It is sufficient that the activity takes off a little, that a two budgetary measures are in place to return tax revenues to return to a primary surplus and so reduce the debt service. In terms of politics, the upcoming elections in 2012 should bring more stability to the country and more rigorously.

This decision threatens to fuel the fears of contagion from the debt crisis in the euro area?

No. In Spain, the victory of the right envisaged in the next few elections suggests a plan of fiscal restraint that will reassure the markets. As for France, even if growth is weak, it still emits positive signs.

The President of the ECB press the Europeans on Monday to implement the plan of aid to Greece. It stresses the need "absolutely imperative" for budgetary surveillance state and evokes, ultimately, confederal Possibility of a government. Jean-Claude Trichet, President of the ECB.

"We have an immediate need and imperative that all these decisions are implemented." The President of the European Central Bank (ECB), Jean-Claude Trichet, on Monday stressed the urgency to implement the decisions aid to Greece agreed at the summit of the euro area, on July 21.

They are supposed to give the euro area financial and institutional resources necessary to prevent contagion to the whole Greek area.They need to come out, be ratified by the parliament of each of the signatory countries.

But the political obstacles to such ratification have multiplied in recent weeks. Finland wishes and its contribution to the plan is guaranteed by Greek and Athens, Slovakia, the vote of the parliament could only take place in December.

These uncertainties prevent an immediate strengthening of the financial resources of the European Financial Stability (EFSF), which must be able to buy government bonds to support countries in need.

Jean-Claude Trichet was widely considered "absolutely imperative" Monday to strengthen economic surveillance in the euro area. "We will in the coming days a new pillar of surveillance of macro-economic indicators of competitiveness and imbalances within the euro area," it was bliss.

Eventually, he reiterated, "we can imagine a government with a confederal Confederal Minister of Finance could provide the overall governance within the euro area and impose a particular decision." It would have a responsibility to support "the European position in international negotiations on the financial" and is also responsible of the financial sector, he said.

The President of the ECB has also complained that the European single market to 27 "is still far from complete, very strangely in the area of ​​services."

In addition to this "glaring anomaly", Mr Trichet spoke of "a major structural reforms".The Europeans, he joked, "like those operettas where they say, walk, walk, walk, run, run, run, remaining almost stationary."

"That's about what happens with the Lisbon Agenda" which was to make Europe's economy the most competitive and dynamic world, he noted.

Mr Trichet also estimated that world governments were "halfway" in their efforts to enhance the soundness of the entire financial system.

EFG Eurobank and Alpha Bank, respectively number two and three of the banking sector in Greece, will announce Monday a merger agreement to jointly face the challenges of the Greek economy, banking sources reported.

The agreement, which should lead to the largest bank in Europe's southeast by the assets, should enable the two facility to avoid having to use the mechanism of public provision of liquidity is likely to trigger a wave of consolidation in the sector, analysts said.

"The boards of both banks will sign the agreement and the announcement Monday morning and a press conference will take place at midday" told Reuters a source familiar with the bank.

The two banks have sent an invitation to the press for a joint press conference at 1100 GMT Monday, without specifying the subject.

"This is a friendly merger agreement between Eurobank and Alpha Bank, with the participation significantly from the Qatar Investment Authority" (QIA), told Reuters a banker of Alpha Bank.

The new entity will have 150 billion euros in assets, eight million customers and 80 billion euros in deposits, said a third source.

According to an official of Eurobank, the operation, if it is approved by shareholders of both groups take the form of an exchange of shares.

The QIA, sovereign fund of the Gulf kingdom, was already a shareholder of Alpha Bank.With this agreement, it will become a significant shareholder of the new group, according to sources, one of which states that the QIA has signed the agreement Saturday.

Analysts have welcomed the prospect of the merger, including Eurobank, which failed in July to stress test bank.

"This is a strategic decision that goes in the right direction and protect the two banks of worse to come for the Greek banking sector," Judge Takis Zamani, Beta Securities.

"Qatar is likely to inject money into the new entity at a time when Greek banks face a lack of liquidity, the losses in the ISP (plan of voluntary participation from the private sector with Athens, Ed), and higher impairments on credit, "said he.

Alpha Bank shows a market capitalization of 1.07 billion euros, against 1.02 billion for Eurobank. Their shares are down by 50% and 51% since the beginning of the year.

The first bank, National Bank of Greece, for its part has a capitalization of 2.88 billion euros.