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Euro Debt Crisis

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Cyprus is expected to complete capital control measures on Wednesday to prevent a run on the banks by depositors anxious about their savings after the country agreed a painful rescue package with international lenders.

 

Cypriots have taken to the streets of Nicosia in their thousands to protest at a bailout deal that they fear will push their country into an economic slump and cost many their jobs. European leaders said the deal averted a chaotic national bankruptcy that might have forced Cyprus out of the euro.

 

For more details -

 

Capital controls being readied to avert bank run - Cyprus Mail

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Cyprus government officials are seeking easier bailout terms in talks with representatives of the European Union and International Monetary Fund on 2nd April.

 

The Cyprus General Market Index fell 2.5 percent to 99.54. The country’s exchange opened for trading today after closing for more than two weeks.

 

Under the agreement reached for the country’s banks, 40 percent of deposits above 100,000 euros held at Bank of Cyprus will be temporarily frozen to ensure the lender’s liquidity.

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As the Eurozone languishes in recession and unemployment reaches record levels, the European Central Bank (ECB) is toying with the idea of lowering interest rates. If it does so, it will be the first rate cut in 10 months. Things are not looking great in the region. Certain countries continue to remain on the edge of bankruptcy saddled with too much debt. As per an article on CNN Money, unemployment levels in Greece and Spain have scaled new peaks of above 27%.

 

What is more, more than half of young workers under the age of 24 are out of work in both nations. Already, interest rates are hovering around zero; the latest rate being 0.75%. So what the ECB expects from an additional rate cut remains a mystery. The Eurozone has structural problems that it needs to address such as too much debt, poor growth and lack of job creation. Short term solutions such as interest rate cuts will hardly solve the problem as the past has shown.

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Cypriot government confirmed that the cost of its bailout had risen from about $23 billion to $30 billion, and that it might have to sell most of its gold reserves to pay for its portion of the bailout.

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Some Fundamentals

 

There has been a round of fiscal easing that was expected. The central banks are working hard the world over, but there is still a lot to do. The ECB has lowered its rates copying US policy. The EU economy has stabilized, but there will be some weakness in the Euro in the near term.

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There are emergency loans from the International Monetary Fund and bilateral loans from the countries that are in the black from those countries that are in the red.

 

Germany guarantees 27% of loans, France 20% and Italy 18%.

 

This is the scenario of who gets how much to save their banks and balance the state budget.

 

Cyprus € 23 billion

The first three of nine billions euros from the European Stability Mechanism(ESM) to Nicosia is coming this month.Cyprus gets another billion from International Monetary Fund in Washington,paid by all EU members.Another six to ten billions Cyprus to collect expropriation savers have more than 100000 euros in certain banks. Russia has been reduced interest rate to Cyprus on loans.Overall, Cyprus needs 23 billion euros.

 

Greece: at least €350 billion.

The European Union,individual countries and the International Monetary Fund promised to Greece 240 billions euros.Greece has so far received 116 billions.Greece received bilateral loans in total 53 billions euro.The International Monetary Fund paid 20 billions euros.From the private creditors Greece has raised 107 billions euros.The current rescue program up to end in 2014.Greece will be able to pay herself -only 2020.

 

Ireland: € 85 billion

85 billion euros needed to clean up the former Celtic Tiger its banking sector, Ireland is 17.5 billion passed itself (state assets and pension funds). The remaining 67.5 billion comes from Community funds of all EU Member States (22.5 billion), the EMS fund to rescue the euro zone from the 17 members states(12.8 billions euros) from the International Monetary Fund.and loans from the United Kingdom (3.8 billion). Ireland has not taken all the means at his disposal for EMS is still almost 5 billion.

 

Portugal € 78 billions

Portugal should be the smallest assistance from the international community.When approved 78 billion euros the distribution of per capita is about 70000 euro per Portuguese.In Greece debt is about 30000 euro per capita.Portugal has been used more than 26 billions euro.

 

Spain €100 billion for banks

Spain needs 100 billions euros for banking sector.The money goes directly to the banks.There is no money in state budget.Spain has no saving policy like other countries Cyprus,Greece,Ireland and Portugal.Until now Spain is receiving about 41 billions euros.

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Midweek, it was announced that the EU had ended its excessive-deficit procedure against Italy. This is the first step in the right direction for the Euro-zone’s third largest economy, and perhaps it means that some fiscal stimulus may be on the horizon.

Still, the European Commission warned that austerity should continue, in order to reduce the country's fiscal deficit from the 5.5% of GDP in 2009 to the 3.0% threshold required under EU regulations, which was supposed to be accomplished by last year. Given the current trajectory of the deficit, the EC’s Italian forecast calls for a further reduction to 2.9% in 2013 and 2.5% in 2014.

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European politicians greeted a report of U.S. wiretappings of European Union buildings with caution and concern, demanding explanations and speaking of a possible souring of transatlantic relations.

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and now the ECB offering guidance about the extended period of time to keep interest rates low........however, we are trading here a CURRENCY PAIR and not a single currency, so more important will be tomorrow's nfp number IMO

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wait wait......it's not over till the fat lady sings.....fat lady=nfp tomorow

Fat lady sang June 19th. Only thing to hear tomorrow is whether we will have triple bottom with April and May lows or if 1.28xx, 1.27xx, 1.26xx are coming soon.

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Fat lady sang June 19th. Only thing to hear tomorrow is whether we will have triple bottom with April and May lows or if 1.28xx, 1.27xx, 1.26xx are coming soon.

 

triple bottoms rarely hold........but surprises we're seen many times.....not a place to short here IMO

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