Top Economics News

The three party leaders of the coalition government in Greece have agreed on a reduction in public spending of 1.5% of GDP in 2012 and will give an answer to the proposal of credit ; the country's international nancial Monday at noon (1000 GMT).

"Political leaders should give an answer in principle tomorrow afternoon (European Union)," he told reporters Panos Beglitis, spokesman for the Greek Socialist Party (PASOK ) on Sunday.

They will then discuss the plan of the troika (International Monetary Fund, European Commission and European Central Bank) at a meeting chaired by Prime Minister Lucas Papademos.

"There will be a meeting of political leaders chaired by Papademos tomorrow afternoon," said Beglitis. 

The chief minister said for his part that the various managers of the government coalition have agreed on a reduction in public spending by an amount equivalent to 1.5% of GDP this year.

This includes measures to reduce salaries and benefits costs to make the Greek economy more competitive, he added.

He also confirmed the meeting of heads of coalition parties on Monday to conclude negotiations on the second aid package of 130 billion euros to be implemented by the mid-March to avoid a collapse of public accounts.

BAROIN OPTIMISTIC

Creditors of Greece had requested a reduction in spending worth one percent of GDP, slightly more than two billion euros for 2012. 

The negotiations on the restructuring of the Greek debt held by the private sector rose "relatively well", said his side the French Minister of Economy and Finance, Sunday .

"I think it progresses smoothly on the part of private sector involvement to be made on a voluntary basis," said Baroin under the "Grand Rendez-Vous "Europe 1-Le Parisien-i> Télé.

"We would not get away from the level at which one must move the Greek debt in 2020, that is to say around 120%," said the French minister. And "it is because we do not withdraw these objectives that the discussions are difficult," he said.

"Anyway, it's later than February 13," continued Baroin.

February 13 is the deadline posed by the euro area to launch the operation, which should bring the Greek debt around 120% of GDP in 2020 against over 160% today.

The private sector should accept a discount of around 70% of its obligations under the exchange program of the Greek debt. This will help to lower than 100 billion euros of debt of Greece.

In exchange for a loan of at least 130 billion euros by 2015, the troika of institutional creditors requires further structural reform and further reforms of austerity authority to clean up its public accounts.

Troika calls including a lowering of wages in companies and supplementary pension, which measures face many political and union resistance.

In the absence of an agreement, Greece is threatened with failure to pay on 20 March, when mature 14.5 billion euros of bonds.

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After the loss of triple A, the real estate professionals were inclined rather to an increase in lending rates. But the opposite occurs in February, according to the online broker best rate.

Contrary to the fears widely reported by the loss of triple-A, mortgage rates are down slightly for this month. This is apparent from a study of online broker, Meilleurtaux.com. In February, 45% of banks show declines of 0.15 points on average, 31% have left the stable. Only 24% have made gains. Overall, the average credit rate stood at 4.28% against 4.31% in January.

OAT rates down

"We do not expect this result" surprising Sandrine Allonier, head of economic research meilleurtaux.com. It must be said that the rate of OAT (comparable Treasury obligations), that is to say the rate at which France takes the 10-year bond has not increased. The Hexagon borrows at preferential rates. And on the contrary, it borrows a better rate. "For example, in February it reached 2.89%, whereas before the loss of the triple A, it was 3.40%," says Sandrine Allonier. Second explanation, the rates of the European Central Bank (ECB) and the interbank rate, the interest rate charged between banks themselves, remain stable. Finally, the loss of the AAA had been anticipated by financial markets and banks have rebuilt their capital. Consequently, they can lower their lending rates long and short term.

March, the month in real estate transactions

"Presumably, this slight decline will continue in March, one month is very rich in real estate transactions." Banks are trying to position themselves in relation to competition. Hence their strategy to attract new customers by lower lending rates in the long and short term. "Some had rates at 4.30%, which rose 4% in February. These banks want to take their game," said Ms. Allonier. Before continuing, "the banks are still selective about the cases. All require a contribution of 10%."

Apply for credit up

The increase in the number of credit reports is the second conclusion of the study meilleurtaux.com. A figure up 20% compared with December, while still down 2% year on year. Borrowers do not turn away the real estate market. There are still a safe haven, especially since many of them expect lower prices in 2012, "the order of 5% in some areas," said Sandrine Allonier. However, "there is a caution for future buyers: they are occasionally more likely to assess their borrowing capacity before they have found a property. Those who led a project with a signed sales agreement fell 4% over a year. "

Equity markets have appeared hesitant and versatile throughout the session. The European equity markets ended in a disorganized, while at the same time, Wall Street also hesitated between increases and decreases.

Investors have welcomed the drop in bond yields Italian and Spanish through purchases of securities by the European Central Bank in the secondary market.

Traders also mention the idea that the ECB would lend the International Monetary Fund (IMF) to assist countries in the euro area.

But operators remain skeptical, however.

After the Senate Friday, the Italian Chamber of Deputies adopted late Saturday afternoon the law of financial stability, a step that paves the way for Berlusconi's resignation and the formation of a new government.

Berlusconi, who was unable to obtain an absolute majority Tuesday, promised to resign after the Italian parliament have endorsed the law of financial stability, requested by the European partners of Rome to restore market confidence in public finances Peninsula.

Silvio Berlusconi is expected to recover in the next few hours his resignation to President Giorgio Napolitano. It is the former European Commissioner for Competition Mario Monti should succeed him.

U.S. inventories of crude oil fell against all expectations last week, said Thursday the U.S. Agency for Energy Information (EIA).

Crude inventories fell 1.37 million barrels to 338.09 million. Economists on average had expected a rise of 400,000 barrels.

Gasoline inventories fell 2.11 million barrels (consensus: 300,000), to 204.17 million.

The reserves of distillates, which include heating oil, fell by 6.02 million barrels (consensus: -2.0 million) to 135.87 million.

The rate of capacity utilization of refineries dropped 2.7 points to 82.6%.

Around 3:50 p.m. GMT, U.S. crude reduced its losses, yielding 1.3% to 95.80 dollars a barrel.

Core values ​​to take on Wall Street Thursday.

* Chevron announced Thursday a 3.8% increase in its quarterly dividend, which will reach 81 cents per share.

* RAYTHEON published adjusted earnings of $ 1.39 per share for the third quarter and a turnover of 6.13 billion, against a consensus Thomson Reuters I / B / E / S of 6.38 billion of dollars.

* Procter & Gamble announced Thursday an increase in sales in the first quarter of fiscal year and an earnings per share in line with analysts' expectations.

With $ 21.9 billion, the revenue exceeds the consensus Thomson Reuters I / B / E / S, which included 21.53 billion dollars.

Earnings per share was announced at $ 1.03, as expected.Turnover was up 14% to $ 1.68 billion (1.66 billion expected, on average).

* BMC SOFTWARE, which develops business software, announced an adjusted earnings per share of 87 cents against 81 cents expected for the second quarter of fiscal year.

Revenues also exceeded expectations, with 556.3 million against $ 540.4 million expected.

* AETNA – The third group American Health Insurance has reported a profit higher than expected for the third quarter due to a small number of claims.

Earnings excluding items rose to $ 1.40 per share.Analysts on average expected $ 1.15.

Net income stood at 490.4 million dollars against 497.6 million a year earlier. The turnover, however, fell 0.7% to 8.48 billion dollars.

* LAZARD – The investment bank saw its net profit fall by 2% in the third quarter versus the same period in 2010 due to lower revenue from business advisory and asset management.

Net income was $ 62.7 million, or 49 cents a share, against $ 64 million (51 cents) a year earlier.

Olympus still has the title fell 6.81% Friday, the market value of the Japanese and melted with about 50% since last Friday, the day he announced the dismissal of its chief executive Michael Woodford.

Investors have pushed the action and the manufacturer of cameras and optical instruments of precision to a low of two and a half years, adding to even more pressure on the group to be explained on unusually high consulting fees paid in connection with an acquisition and revealed by the ousted leader.

Olympus acknowledged Wednesday it had paid $ 687 million (498 million) in financial advisors in the purchase of the British manufacturer of medical equipment Gyrus.

These fees represent a third of the price of the acquisition, whereas traditionally they account for only 1% or 2% of the value of a transaction, according to a PriceWaterhouseCoopers study commissioned by Michael Woodford.

POLICE PROTECTION

The latter told Reuters on Thursday it had filed for protection under the British police after submitting new information to investigators British anti-fraud regarding fees.

In the data transmitted to the authorities by Michael Woodford, a former investment banker from Japan appears to be the central figure in the matter of fees.

According to these documents, Hajime "Jim" Sagawa was the owner of AXIS, a financial services company little known American who received the exorbitant fees reported by Michael Woodford.

Olympus, which denies any impropriety, said the fees had been paid to its subsidiary AXIS Axam Investments, a company registered in the Cayman Islands, including Hajime Sagawa was a member of the Board, the report of PricewaterhouseCoopers.

Reuters visited the home of the latter, a former Nomura banker, only to find that his wife, who assured that her husband had done nothing wrong.

INVESTIGATION OF SESC JAPAN

Michael Woodford has also written to the Securities and Exchange Surveillance Commission (SESC), the authority of the Japanese financial markets, asking him to consider the case Olympus.

An investigation by the SESC could take months. Financial Services Minister Shozaburo Jim said the policeman of the financial sector would work, but refused to comment on individual cases.

"Olympus has clearly withheld information to investors. And even if she is not guilty of actions contrary to law, management has breached its obligations vis-à-vis shareholders.It should take responsibility, "said Shigeo Sugawara, manager of Sompo Japan Nipponkoa investments in Asset Management.

Olympus may have to spend significant impairment likely to weaken its balance sheet. And even if, according to manager, many candidates would be interested in the instruments of precision optics group, no one would touch it before the case is improper fees paid.

The company is now worth some $ 4.5 billion.

Brokers have suspended their coverage of Olympus as key shareholders and require that the group be made public links between management and its financial advisors.

Moody's is more secure than the debt of France still deserves the highest rating possible. Degradation could occur in the next six months. The consequences for France and the euro area would be dramatic. The budget minister Valérie Pécresse and the Minister of Economy and Finance Baroin

The sacred triple A of France is under pressure: the rating agency Moody's announced Monday night that it planned to lower the perspective of the note lights. A warning to potentially dramatic consequences for France and for the euro area. Explanations.

Our triple-A is really threatened?

For now, Moody's said it just gave himself three months to determine whether his perspective "stable" was still warranted.The agency is careful to note that this review is part of its annual financial statements for France and it is not yet at this stage, a decision on the rating of the country. However, if the prospect of this note should be revised to "negative", this would imply that Moody's would likely reduce the medium-term (usually for a term of three to twelve months). France, would become the new big country, after the United States to lose the precious talisman financially.

This warning is justified? The presidential campaign hostage rating agencies?

The possibility of a deterioration in France is not a surprise. The warning from Moody's, yes. Rating agencies usually just an opinion or negative stable and degrade or maintain the rating. This is especially the timing is symbolic in three months, the campaign for the Elysee Palace in full swing.A negative outlook on the triple A French will become a major issue of debate. The presidential campaign of 2012 will therefore be under supervision of rating agencies. Read about the blog corridors Bercy.

Concerns about a possible deterioration in the sovereign rating lights are not new. France shows the worst ratios of budget club triple A. Government deficit (5.7% this year) exceeds the level of other triple-A in the euro area (Germany is 0.9%, Denmark 4.8%, Netherlands 3.9% Austria 3% and Sweden has a surplus of 1.5%). France, also displays a primary deficit (excluding debt burden) twice (3% of GDP) than its neighbors (1.6% in the Netherlands, Austria 0.9%, 0.5% Luxembourg, while Germany and Finland should generate a primary surplus this year).Finally, France is also one of the few members of the Triple A club to suffer from a deficit in its trade balance. Also, since the deterioration of the U.S. Standard & Poor's this summer, the French note seems undeserved. However, all agencies – including Moody's – had denied market rumors in August, reiterating that they maintained their confidence in the Triple A of France.

The context was it damaged?

Since this summer, nothing goes to France: there was no growth in the second quarter and looks just as sluggish by the end of the year, the euro area is still mired in the debt crisis and banks French are in the financial market turmoil. This is precisely what worries Moody's. It is "crucial" for France to maintain "investor confidence in its ability and willingness to deal with unexpected challenges," noted the agency in a statement.Or "France could face a number of challenges in the coming months – such as the need for additional support to other European countries or its own banking system, which could increase so significant commitments to be borne by the budget of the country, "she adds. In short: France has more financial flexibility. We understand better the current government reluctance to recapitalize its banks with public money and increase the discount to private creditors of Greece.

What consequences for France if they lose their triple A?

The fact benefit from the best possible rating allows France to borrow in the markets on very favorable terms to finance its debt. Lose this note would increase interest rates, so an increase in the cost of borrowing of the French state.The difference between the rates of French government bonds to 10 years (OAT) and German government securities of similar maturity (Bund) has also passed on Tuesday for the first time, a percentage point. At the same time, insurance against a default on the obligations of the French state (CDS) increased by 10 basis points. Currently, it costs 194,000 euros to insure against exposure to 10 million euros in French government bonds. France must make 8.6 billion euros of bonds by December and 179 billion in 2012 to renew its stock of debt. Direct consequence for the first time, the debt burden will be the first budget item next year, on top of School. According to government projections, it will amount to 48.77 billion euros. If France is losing its triple A, it could be more.Because unlike the United States, whose Treasury bills are still considered a safe haven, the obligations of the French state is not immune to a general distrust of investors, because of the context of European crisis.

And for Europe?

The loss of the triple A French would not be good news for the euro area. This would call into question the quality of borrower of the European Financial Stability (EFSF, which currently enjoys the highest rating possible), because France is the second largest guarantor. Now this tool is the cornerstone of the plan to end the crisis in the euro area. Moreover, France would potentially the camp of countries to aid those who need help.This would call into question the relationship quickly the Franco-German motor of advances in European governance, as both countries do more than talk on equal terms (triple A to triple A). The temptation would be great for the best students in the euro area to operate in a vacuum and cease to be in solidarity with the lower-rated countries. This would result in the breakup of the euro area.

Can we avoid losing our triple A?

"The continued commitment to implement economic reform measures and budget, and visible progress in the goals" for reducing debt "will be important for maintaining the stable outlook" of the note of the country said Moody's. The Minister of Economy and Finance Baroin said Tuesday that Paris would "do everything possible" to keep its deficit reduction targets.For 2011, the deficit target of 5.7% seems achievable. He enrolled in the draft budget law in 2012 (4.6% of GDP), that MPs prepare to vote today, the state seems inaccessible, because built on a growth assumption of 1.75 %. However, most forecasters expect at best a GDP growth of 0.9% next year. That means ten billion euros in additional savings to identify. Last night, Prime Minister Francois Fillon acknowledged that it will take "new measures" austerity if growth is not at the rendezvous. At the risk of bringing France into the spiral-rigor recession in Greece and Portugal for two years.

Belgium, Luxembourg and France came Thursday to the heart of the negotiations on their respective participation in the rescue of a new Franco-Belgian bank Dexia, expected to lead discussions in a few days to a dismantling of the group ordered.

The Belgian government has warned Paris that Belgium did not intend to bear alone the financial burden of the rescue of the old world leader in financing local authorities, the first victim of the banking crisis of sovereign debt in the eurozone.

"It is clear that a very sensitive and crucial element in the negotiations, it is fair burden sharing," said Yves Leterme, Belgian Prime Minister in charge of current affairs, radio RTL.

If he declined to go into details of the negotiations, he recalled the nature "systemic" Dexia for the banking system.

His finance minister Didier Reynders also stressed the need for a balanced sharing of effort."Yes, we do not want to be alone with the whole group on our hands," he told reporters before a meeting of a small cabinet in Brussels.

"Do not forget that not only support the Belgian bank but it must continue to fund all the past, and we will not do it alone," said Didier Reynders, stating that it would begin negotiations with France after obtaining a government mandate.

In France, neither the Ministry of Finance or the Treasury or the Bank of France was immediately available to comment on the progress of negotiations on Dexia, whose board of directors to be held Saturday .

REDEMPTION FOR DEXIA BIL

Luxembourg has for its part that it was negotiating the acquisition of the Luxembourg subsidiary of Dexia, Dexia Banque Internationale à Luxembourg, with the help of an international investor.

The Minister of Finance of the Grand Duchy, Luc Frieden, said that negotiations on the resumption of Dexia BIL were in an advanced stage and could be finalized before the end of October, without specifying the identity of the investor.

With the statements of the Luxembourg authorities, the Dexia has suddenly turned down.

At 13:00, the action gave up 0.90% to 11.66 euros after

open up like other European banking shares.The European banking index progressed by 3.2%.

"This should generate a capital gain, which is positive.However, Dexia BIL is certainly rich in deposits, the sale of the blow will not ease the problems of financing the group, "said one trader in Paris.

The rescue plan could weigh on public finances of France and Belgium, already undermined by the crisis, and trigger negative reactions in public opinion.

The scenario being considered involves a backing of the main activities of Dexia in France at the Caisse des Depots (CDC) and the Postal Bank.

In Belgium, the plan could be realized by a partial nationalization of the retail or split it into a separately listed entity.

For the rest of the group, a "bad bank" would be set up to manage a large bond portfolio and an asset disposal program would be launched.

France and Belgium must commit to provide guarantees for the financing of the bond portfolio.

France and Belgium flew Tuesday to rescue Dexia, ensuring that both countries would take all necessary measures to ensure its funding while its share price collapsed and the specter of a rollback.

Following a board meeting of an emergency, the Franco-Belgian bank said in the night to consider measures to enable it to strengthen its financial structure, without, however, categorically rule out the scenario of a split, what 'She was still there just a few days.

Dexia shares had lost up to 38% in the morning Tuesday, reaching its lowest historical levels, then some limit its losses by early afternoon.

Around 2:00 p.m., Dexia lost 13.5% to 1.12 euro, while the European index of banks, although affected by the new fears of Greek sovereign debt, limiting its losses to 4.6%.The stock has lost 54% since the beginning of the year, bringing its market capitalization of 2.2 billion euros.

The scenario of a dismantling of Dexia as structural solution to the financial difficulties of the Franco-Belgian bank has not been formally denied by the Belgian or French.

A French government source said, however, "reject" this term, preferring to speak of a major asset disposal.

The group is mainly composed of a retail bank in Belgium, a private bank in Luxembourg, a division of funding for local authorities in France and banking Denizbank in Turkey.

Meeting in Luxembourg for a council of the European Union finance ministers Belgian and French said the two countries brought their guarantee to finance Dexia without specifying the terms of the transaction.

GUARANTEED FINANCING

"We guarantee funding.For the procedures, there are instances, let the time to organize these deliberative bodies (…) All we are saying is that states will meet present as in 2008, "said Baroin to press.

The question of a recapitalization by the States, would constitute a de facto quasi-nationalization has not been formally excluded.

"Everything will depend on the scheme presented by the management of Dexia," said his side the Belgian Minister of Finance.

Speculation about the future of Dexia also include the creation of a "bad bank", a bad bank that would separate confined bond portfolios at risk for the bank.

The creation of a new French bank – which would lean part of the portfolio of loans to local Dexia to those of the Deposit and the Post Bank – also seems likely.

The possibility of a sale to another Dexia European banking group, on the model of Fortis sold to BNP Paribas, has not favored by analysts, investors, stressing that Dexia is not salable as such.

The announcement Sunday that Greece would not take the objectives of fiscal consolidation has aroused the distrust of investors and markets, accelerating the pressure on the most vulnerable groups such as Dexia.