Top Economics News

Greece has one last chance to stay in the euro area and must make a "maximum effort" to avoid being brought back several decades, warned Wednesday the central bank Hellenic.

Painting a picture severe the nation's finances, the Bank of Greece said that the failure to achieve its fiscal targets, delays in implementation of reforms and strong economic contraction had questioned his recent claims about the sustainability of the country's debt.

"The country must avoid at all costs further delays or deviations from objectives; every effort is needed to do better than the targets," said the Bank in its interim report on monetary policy.

"The current situation is the most critical period of Greek history of the postwar period. What is at stake is whether the country will remain within the euro area."

The new prime minister, Lucas Papademos, promised to push reforms forward, although he met a mixed support for the main parties and trade union opposition to the new austerity plan which he has committed.

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.

French household consumption of goods increased by 0.2% in August after a decline of similar magnitude in July, show statistics released Friday by INSEE.

Economists polled by Reuters on average expected a stable consumption in July and up 0.3% in August. The growth in consumption in June was revised down to 0.9% against 1.2% originally announced.

"The slight decline in July due mainly to a decline in purchases of cars and housing equipment," INSEE said in a statement."The recovery in consumption in cars and rising energy costs contributed to the slight increase in consumption in August."

Spending on durable goods rose 0.8% in July but remained stable in August. Purchases of automobiles rose 0.9% last month after falling 1.5% in July, according to Insee attributable decline in second-hand market.

"However, note INSEE, after the sharp increase in June (+3.9%), purchases of equipment housing down again in July (-0.7%) and August (-1.7% ).The decrease concerns in particular the purchase of furniture. "

Purchases of textiles and leather rose 1.0% in July after rising 3.6% in June but fell 2.3% in August.

Consumer spending in other manufactured goods rose 0.2% in July but fell even in August.

Meanwhile, household consumption of energy has accelerated markedly in August (+2.6% after +0.2% in July), a movement linked in particular to fuel costs.

The new acting director general of the Swiss bank UBS, which replaces Oswald Grübel after the latter resigned in the wake of the scandal of unauthorized transactions, must now face the difficult task of setting back on their feet.

Saturday, Sergio Ermotti said that the case had uncovered an exposure "totally unacceptable" and said his priority would be to review the control procedures of the bank and conduct an internal investigation into heavy losses.

Sergio Ermotti, a Swiss Ticino aged 51, joined UBS in April from the Italian bank UniCredit.

According to the group's president, Kaspar Villiger, it would be a good candidate to permanently replace Oswald Grübel.

"We are aware of facing a difficult time externally, and this latest incident only makes more imperative still a reaction from us. Let us not, however, UBS is one of the best banks capitalized in the world, "said Sergio Ermotti.

Since the announcement of the losses on September 15, the title UBS has sold more than 10%.However, it has taken 4.8% Friday on hopes that the Board of Directors of the bank agrees major restructuring.

The internal investigation into the loss should result in a delay of 10 to 14 days, but because of external investigations, UBS will not necessarily reveal the findings, said Sergio Ermotti.

The Board asked the latter to accelerate the reduction of investment banking activities.The process must be detailed on November 17 in New York.

According to Kaspar Villiger, the future director of investment banking, Carsten Kengeter, is not threatened, the latter having already worked with a "great job" to limit losses from unauthorized transactions.

However, he did not mean to say if it would make a good candidate for Director General, who shall be provided with permanently within six months.

The current account deficit widened from France in July to 4.5 billion euros from 3.4 billion in June, preliminary figures show released Tuesday by the Bank of France.

The trade deficit in goods reached 6.7 billion, one billion more than the previous month.

Trade in services have in parallel a surplus of 1.2 billion, down slightly from June.

The balance of revenue reached 3.2 billion euros from 3.0 billion while the deficit on current transfers remained unchanged at 2.2 billion.

The financial account showed net outflows of direct investments of 8.5 billion euros from 6.2 billion in June.

French direct investment abroad stand at 4.3 billion, the Bank of France said in a statement, "while an exceptional operation makes the negative balance of foreign investment in France: the purchase by a French group of significant foreign participation. "

Portfolio investment recorded net inflows of 5.3 billion euros residents reduced their holdings of 16.0 billion while non-residents making sales of French securities to 10.7 billion.

Other investment posted a net outflow of capital limited to 5.3 billion from net outflows of 49.0 billion.

The exemption from taxation of capital gains on sale of property, excluding principal residence, will no longer only after 30 years, against 15 at present. From 1 February 2012, the exemption from taxation of real estate capital gains will be complete only after 30 years in prison.

First measure of austerity, the new method of taxation of capital gains, property was passed in the night from Tuesday to Wednesday. After a lengthy discussion of the implementing rules, MEPs adopted the exemption of real estate gains of second homes after 30 years of holding the property. The current system reduces the taxable gain on resale of 10% per year from five years of detention, where a full exemption after 15 years ..

The entry into force of the device has also been postponed to 1 February 2012 and not August 25, 2011.Which will result in a shortfall of 180 million euros this year. In the end, the measure will bring 2.05 billion euros in 2012 instead of the 2.2 billion expected previously.

The compromise, "a major effort" according to Valerie Pécresse, Minister for the Budget, is in fact a system of progressive discounts. A number of deputies to the UMP and the New Center, wanted to return to the detail and the regressivity of the system over time. Now it will be 2% for each year between 5 and 15 years in prison, 4% for each year beyond 17 years, 8% beyond 24 years to 30 years. That amendment, designed to "take into account inflation in the 80" results in "an additional cost of 30 million" annually, said Ms. Pécresse.

During the debate, Michel Bouvard (UMP) has highlighted the issue of those who have no residence, untaxed, and holder of a second home."We need to think about it" in the forthcoming Finance Bill 2012, the minister conceded.

The British authorities to fight against fraud are currently reviewing certain transactions by Deutsche Bank and Goldman Sachs, the Financial Times reported Monday.

The daily said that the investigation is part of a collection of evidence to determine whether certain financial institutions have fraudulently presented some financial stocks to their customers and counterparties is misleading.

The Serious Fraud Office (SFO) UK has spent the last two years to focus on sales of bonds backed by home loans (ABS) and their possible role in the financial crisis of 2008-2009.

Monday, fifteen minutes after the opening, the action Deutsche Bank lost 5.5% to 24.59 euros.The European sector index banks lost 3.31% to him, in reaction to the fact that the U.S. federal agency oversight of mortgage loans (Federal Housing Finance Agency, or FHFA) filed a complaint Friday against 17 major financial institutions for losses relating to bonds linked to subprime.

Deutsche Bank is already covered since Friday by a complaint from the U.S. federal agency oversight of mortgage (FHFA), which accuses 17 major international financial institutions for a total loss of $ 41 billion in bonds linked to subprime These loans granted without regard to the resources of borrowers.

Goldman Sachs, Bank of America, JP Morgan Chase or Societe Generale are among the other banks involved.

According to the FT, the British SFO also examines transactions Goldman Sachs, which said the file Timberwolf, an ABS fitted by the bank in 2007 and that U.S. authorities are also interested.

The SFO has not yet opened a formal investigation but has appealed for witnesses.

Neither Deutsche Bank nor Goldman Sachs were not immediately available for comment on the report.

Italy must complete structural reforms and implement the commitment made last month to reduce the deficit and make the economy more flexible, wants the President of the European Central Bank Jean-Claude Trichet.

In an interview published Friday by the financial daily Il Sole 24 Ore, the chairman of the ECB considers that the measures announced in Rome on August 5 is "extremely important".

Council President Silvio Berlusconi had promised then to bring the Italian budget balance for 2013.

"It is therefore essential that the stated objectives for the improvement of public finances are fully confirmed and implemented," said Jean-Claude Trichet.

The latter made no direct comment on the economic plan of 45.5 billion currently being debated in the Italian Parliament, merely to emphasize the importance of Rome to implement measures enhancing the entire national capacity in the medium and long term.

He however reiterated his call to the governments of the euro area to address the weaknesses of their economies and strengthen mutual surveillance and governance.

"The European states must correct the current situation," he said.

Asked about the prospects for creation of Euro-bonds common to all countries of the monetary union, he said that the European Financial Stability Fund (EFSF) already issued securities backed by the European authorities.

"The key message of the Board of Governors is a call for rapid implementation, full of decisions taken by Heads of State and Government of Europe July 21," said the president of the ECB.

Eurobonds are not the answer to the debt crisis in the euro area, said German Chancellor Angela Merkel.

"The Eurobonds are quite the wrong answer to the crisis of the moment," she said in an interview with the ZDF channel that is being broadcast on Sunday."They would lead us to a union of debt and not a union of stability."

The issuance of Eurobonds ("Eurobonds") would cost billions of euros in Germany each year, according to calculations by the German Ministry of Finance quoted by the weekly Der Spiegel.

"The first year it would mean 2.5 billion euros of interest in addition to the budget (Finance Minister) Wolfgang Schäuble and the second year costs would be twice as high," wrote Der Spiegel in extracts of its survey sent to the press.

After ten years the total cost would be 20 to 25 billion euros, according to the calculations of the Ministry of Finance.

Schäuble said for his part personally prepared to transfer sovereignty to Brussels to ensure the stability of the euro area over the long term but added that the euro area itself was not prepared for this eventuality.

"As a person, Wolfgang Schäuble would be ready (to delegate sovereignty to Brussels).The idea of ​​a European finance minister I have no problem, "he said in an interview published Sunday by the Welt am Sonntag.

"But as finance minister I say that it is our duty to solve problems here and now, and that as soon as possible based on existing contracts."

This idea of ​​a European finance minister is particularly recommended by the chief executive of Commerzbank Martin Blessing, in an interview with Welt am Sonntag.

"With the introduction of a fiscal union, Brussels must have the right to return of budgetary powers to countries that do not respect the rules, and to levy its own taxes and create a joint body to issue bonds," he said.

France and Germany are adamantly opposed to the idea of ​​issuing bonds on behalf of the entire euro area, as advocated many market professionals to put an end to the crisis of European sovereign debt .

"Most member states are not quite ready to accept the necessary limitations on national sovereignty, but believe me, it's a problem we can solve," he told the minister.

Schäuble will meet Finance Minister Baroin Tuesday at 8:00 GMT to discuss including the harmonization of corporate tax and the introduction of a tax on financial transactions.

He said Saturday that the countries of the euro area could issue Eurobonds scaffold as if they had a prior fiscal policy and common taxation or they could create inflation and destabilize the region.

Wall Street is divided sharply lower Wednesday after strong rebound yesterday, showing investors still worried about the state of the economy after the declarations of the Federal Reserve.

A few minutes after the opening, the Dow Jones yielded 2.79% (311.48 points) to 10,929.88 points, the S & P 500 fell by 2.73% (31.97 points) to 1140.56 , while the Nasdaq composite fell by 2.82% (70 points) to 2412.98 points.

Persistent fears about the economy and the deficit portend as the eve of a highly volatile trade.

"At this stage, investors dizzy," says Oliver Pursche, president of Gary Goldberg Financial Services. "We look forward to another highly volatile.