Financial Communique » Finances

Germany was complicit in irrational credit practices of Greece

Viliyana Filipova — Sun, 05 Feb 2012 16:19:41 +0000

A little more than a week the German government proposed “Budget Commissioner” of the euro area to exercise direct control over the budget of Greece. With this proposal, Berlin, Athens asked to give up its sovereignty in the name of financial assistance, to prevent the bankruptcy of our southern neighbor. Although the European Commission (EC) rejected the proposal, it is not sunk into oblivion. Greece can not settle with its creditors, which leads to two outcomes for the country: either declare bankruptcy or to continue negotiations with the private sector, the European Union (EU) and International Monetary Fund (IMF), says the CEO of American company Stratfor Strategic Analysis and reputed political scientist George Friedman. In his agreement with its creditors Greece will consist of three parts: the forgiveness of the debt, additional financial assistance from the EU and IMF agreement to limit government spending and raise taxes so as to avoid future sovereign crises or at least to be paid to the Greek debt. The Germans certainly do not believe the Greeks, as the latter have not met already made commitments to creditors. That lack of confidence led to the proposal for budget control, but it would be okay, if it is a corporation or a private person, says Friedman. Such a request from a nation state, however, is unacceptable according to the analyst. State is based on two premises. The first is that the nation state is unique legitimate community whose members share a common range of values and interests. The second condition is related to the occurrence of the state. Friedman points out that this happens in people’s will and only has the right to determine state action.
“There is no doubt that Greece is a nation and the government in Athens in accordance with the principles of the state is responsible to the Greek people,” wrote Friedman in his analysis. Germany claims that Greece has failed as a country, for which creditors have a moral right and power to suspend the principle of national self-determination. This is a very radical concept and it is important to understand how it came to her, wrote in the analysis of the expert. The reasons he says are two. First Greek democracy, and many other democracies, requires the state to the benefit of people. Politicians in Greece who want to be selected to provide guarantees for those benefits. Hence the pressure for excessive costs. The second reason, according to George Friedman is associated with the status of Germany as the second largest exporter in the world. About 40% of German gross domestic product (GDP) is formed by exports of the country, most of it is for the EU. Therefore Berlin’s interest to increase demand and consumption, otherwise the country would be depressed.

China should reduce the inflation and the budget deficit

Viliyana Filipova — Sat, 05 Mar 2011 13:53:17 +0000

Fighting the inflation is a key economic priority for China this year because the government aims to limit the risk of social unrest, Prime Minister Wen Jiabao in a speech to the country conditions.
“We can not afford the price increases to affect the normal life of people with low incomes,” said Wen in the report the annual meeting of The Chinese meeting of MPs in Beijing today. “This problem affects the welfare of the people has common interests and concerns social stability.”
The 64-year-old Wen confirmed targets 4 percent inflation for the whole year and 8% growth against attempts by the Communist Party to provide support for the 61-year rule. Over the past two weekends government sent hundreds of police in Beijing and Shanghai after the Internet calls for protests, inspired by bunks in the Middle East and North Africa.
“Inflation has the potential to trigger social unrest,” said Liu Li-Gang, an economist at Australia & New Zealand Banking Group in Hong Kong. The government should increase interest rates on loans and deposits by 0.75 percentage points by year’s end, and to raise wages and to grant aid the poor, he said.
Among the major problems of society Wen highlighted the illegal seizures of land, food safety, “excessive” increases in housing prices and “massive corruption” in some places. The government will oppose inflation “decisively” and would turn it into a “top priority for macroeconomic control,” the Chinese premier.
Lower budget deficit
The budget deficit may be 900 billion yuan (137 billion dollars) in 2011, or 2% of GDP by 150 billion yuan less than the target for 2010, said Wen Jiabao. He confirmed that the country supports “proactive” fiscal policy and “prudent” monetary policy. Yesterday the Shanghai Composite index rose to a four-peak because of investor expectations for measures to support consumption. The Chinese government plans to reduce dependence on exports and investment and strengthen consumer spending – a move that could help reduce global economic imbalances blamed for financial crisis.
“Increasing the domestic demand is a long term strategic basis,” said Prime Minister in the report. The granting of subsidies for urban population with low incomes and for farmers and conservation incentives for the purchase of household appliances in rural areas will contribute to increased costs, he said. The government also provides support for private investment. To control inflation, the government will manage liquidity to ensure agricultural production and will resort to price controls when required, said Wen Jiabao. According to him, state officials will limit speculation in real estate and will “adjust and improve the” fiscal policies in the property.
“The main challenge to control inflation bubble in property prices that comes from too free cash terms to the price of assets,” said economists days ago in a report from China International Capital Corp. Ltd.

Mergers and acquisitions worldwide are gaining power

Viliyana Filipova — Thu, 25 Mar 2010 11:46:17 +0000

Mergers and acquisitions worldwide are gaining momentum in the first quarter of the year in the last three months were made over 2 thousand cross-border acquisitions and hostile takeovers 10. To contribute to this recovery in the global economy and stock market rally over the past 12 months. The value of takeovers increased by 5% annually during the first three months of this year to 498.24 billion dollars, cited by Bloomberg. Hostile acquisitions recorded growth of over 300 percent to 17.46 billion dollars. According to Mark Sharif, head of the Department of mergers and acquisitions for Citigroup, acquisitions may increase by 15-20% by the end of this year, provided that the global economy to shrink again. Last year, the realized value of acquisitions fell by 27 percent to 1.8 trillion. dollars, which is the lowest level for the past six years. Citigroup is one of the largest consultants in this field, she managed the sale of Asian life insurance unit of AIG, which was bought by Prudential of Britain’s 35.5 billion dollars earlier this year. It is the biggest deal in the market of mergers and acquisitions this year. Among the biggest deals this year and became hostile takeover of British chocolate maker Cadbury on the U.S. food manufacturer Kraft Foods. After four tense battle Cadbury has been absorbed by Kraft Foods for an amount of 21.4 billion dollars in February this year.
Hostile acquisitions this year include a number of companies in the pharmaceutical and chemical industries. Much of the acquisitions were made by companies operating in neighboring countries, which enables them to expand their markets. In Latin America, much of acquisitions in the food industry, extractive and telecommunications sectors. Most companies, however, are active in the Asian region where mergers increased by 100% yoy to 185.5 billion dollars in the first quarter. Thus it is close to the amount of acquisitions in the U.S., which has 250.5 billion dollars for the same period.
The biggest consultant in mergers and acquisitions in the world is U.S. investment bank Goldman Sach, followed by Swiss Credit Suisse, German Deutsche Bank, and U.S. banks JPMorgan and Citigroup.

Nestle report better than expected

Viliyana Filipova — Sun, 21 Feb 2010 22:40:35 +0000

The Swiss company Nestle lay a better than expected preliminary report, giving an argument of analysts who firmly pledged the company as a preferred investment in Europe. Revenues from sales of main products of the company rose by 4.1 percent in 2009, indicating stability amid the crisis. This is to bring Nestle revenue of 108 billion Swiss francs (99.91 billion dollars). Preliminary expectations of analysts was for sales growth of 3,9 percent to 105.9 billion francs, transmit CNBC. “The progress over the last year growth of 4,1 per cent against the backdrop of a complex environment shows that we are able to note an increase greater than that of the sector as a whole,” stated the CEO of Nestle Paul Balk. Operating profit of Nestle for the year 2009 amounted to 15.7 billion francs.
The net profit was up even of 10,4 billion Swiss francs, down from nearly 50 per cent compared to a profit of 18 billion francs a year earlier.

In the results for 2008, however, went 9.2 billion francs from the sale of 25% of the share capital of Alcon to Novartis.

JPMorgan invest $100 million in global commercial banking division

Viliyana Filipova — Fri, 29 Jan 2010 01:31:06 +0000

JPMorgan Chase will launch its global branch banking, which will offer commercial banking multinational corporations transmit Financial Times. This will instruct the bank alongside Citigroup and HSBC. From JPMorgan plans to invest more than $ 100 million in commercial banking division, which will consist of 300 people. The activity will initially be focused on emerging economies such as China, India and Brazil reveals Financial Times. JPMorgan is the aim of reducing their dependence on the weak U.S. economy and to benefit from the problems of Citigroup, have shared the bank’s executives told the newspaper.
Britain, Germany and Switzerland are also among the key target markets of the new unit.

Warn of possible shock because of the more expensive yuan

Viliyana Filipova — Wed, 27 Jan 2010 11:35:43 +0000

The U.S. market analysts predict a new shock to the markets. After Obama’s intentions to repair the banking system radically, according to them, now it is time for China to throw bombs in markets. This time, however, no room for panic, because it is forecast that China will take once an increase in the value of its currency. This should give a strong impetus to the markets, as can be extremely useful for most economies in the world. At this stage, however, nothing is certain, so do not make the mistake to trust fully the hearing, Brian Kelly warns of Kanundrum. “Many foreign exchange traders talking about this for quite some time, but so far nothing like that has happened,” he said. Kelly himself believes that it is very likely to happen. “There are political and economic will in China to do so, he believes. “From an economic standpoint, if inflation continues to grow, they will be most useful to let the yuan to rise and to suppress growth in prices. Purely political, such a decision would simply make the situation of China to the world a favor, “he said.
In the event that the analyst be right, it can be expected strong performance of stock indexes around the world. The reason for this is that foreign producers of goods will become more accessible to the 1.3 billion Chinese.

Big expectations for financial reports of Alcoa, Intel and JPMorgan

Viliyana Filipova — Sat, 09 Jan 2010 08:38:25 +0000

Disappointing data on the reduction of employment in the U.S. economy in December, however, failed to wipe out the economic optimism of investors. He was a driver of the rally on Wall Street over the past ten months, together with the measures of governments and central banks to combat the effects of financial and economic crisis. The next few weeks, will be much more dynamic with the beginning of the first corporation to the new year season. Three of the largest companies in the index of blue chip Dow Jones IA – Alcoa, Intel and JPMorgan Chase, will publish its financial results for the fourth quarter of last year over the next five days, police CNN. On the economic front, the most important will be data on retail sales in the U.S. in December, and those for consumer confidence, industrial output and trade balance. The indexes reached new 15-month highs earlier this year, their rally would depend largely on the financial performance of the stock companies that would be indicative of the actual state of the economy. For the last quarter of 2009 is expected to increase the profits of companies in the S & P 500 by over 200% yoy. However impressive forecast is due largely to the sharp deterioration in financial results over the last comparable quarter of 2008, when the crisis hit very companies most like those suffered from the automotive and financial sectors. Week, and corporate season will begin with reports of aluminum giant Alcoa, which is expected earnings per share of 6 cents to a loss of 28 cents a year ago. On Tuesday, after the end of the session and the results will come out of the technology company Intel, which is expected to more than seven times greater earnings per share from 30 cents.
On Tuesday, expect the first week of economic data that will be on the trade balance the United States in November. Projections indicate that it will expand to nearly 35 billion dollars. On Wednesday the data does come out of the U.S. government deficit, which is estimated to be approximately $ 85 billion in December compared to 120 billion dollar deficit for December. Then as usual and expected data for U.S. oil stocks, and etc. “Beige Book” for economic development in different regions of the country. Very important will be data on retail sales in December, which goes on Thursday and are expected to show growth of 0.4 percent compared to November, when it rose by 1.3 percent on a monthly basis. On Thursday and will publish data on new applications for unemployment benefits last week, and those on business inventories in November. On Friday before the session is expected to JPMorgan reported profit per share from 63 cents, which is much more of the 7 cents a year ago. Before the start of stock trading will put the data for the index of consumer prices in December, which is expected growth of 0.2 percent and industrial production data, which is projected monthly growth of 0.6 percent in December.
Shortly after the session will come up and the index of consumer confidence in the University of Michigan in January, which is expected to increase to 73.8 points. Consumer attitudes are a leading benchmark for consumer spending, which are the source of most of the gross domestic product.

Eastern Europe may come out clean from the Dubai Affair

Viliyana Filipova — Fri, 27 Nov 2009 12:56:16 +0000

Expanding markets in Central and Eastern Europe will suffer relatively good shocks, created after the credit crunch in Dubai, says an analysis of the Italian UniCredit. The reason for this is that banks in the region are not directly affected, as in Western Europe. Another analysis of Credit Suisse predicts that financial institutions in Western Europe stand to lose nearly 13 billion dollars in the bankruptcy of the Dubai government investment fund Dubai World. According to UniCredit Central and Eastern Europe for short will be negatively affected by debt problems of Dubai as there is an increase in so-called Risk Aversion or willingness to invest in less risky assets. The bank argued that the presence of the IMF in some countries in the region has some stability. In conclusion the bank determines that Eastern Europe will be affected, but only in the short term, not long, and is not expected to have a serious debt problem in the region. Regarded as one of the most brilliant financial centers in the world until a year ago, Dubai is now among the most uncreditworthy countries on the planet. Again according to Credit Suisse analysis of the emirate to the obligations of European banks are more than 13 billion euros. Spark of hope given the solidarity shown by Abu Dhabi. Two banks of the emirate already unlocked $ 5 billion needed for the most urgent needs of Dubai, cited by BNR correspondent in Beirut.
Dubai is one of the few countries in the Persian Gulf, which has no oil resources. 90-year bet emirate of construction, tourism and luxury. By autumn 2008 it seems he was wearing a success, and incoming capital multiplying skyscrapers. With Financial Crisis, however, investors withdrew and construction companies, seized by giant-mania are unable to bring their projects to the end.

European indexes grew

Viliyana Filipova — Thu, 26 Nov 2009 17:50:55 +0000

The European indexes closed in positive territory, trading, fell after concerns about the effect of the Dubai requested postponement of debt payments. Shares of Royal Bank of Scotland, which provided the greatest amount of loans of the Dubai government investment holding company Dubai World from January 2007 onwards, jumped 5.2 percent after yesterday fell to a seven-month minimum. Michelin and Volkswagen shares up led by the automotive sector yesterday after the industrial group of companies for cars and auto parts, included in the index Dow Jones Stoxx 600 slipped 4.3 percent. Stoxx 600 ended the session with an increase of 1,3 percent to 242.85 points, after earlier in the day lost 1.8 percent. Index yesterday reported the strongest decline since April because of the news from Dubai. Major national indexes rose in all 18 western European markets except Luxembourg and Iceland. The UK’s FTSE rose 1% to 5245.73 points, the French CAC 40 advanced by 1,2 per cent to 3721.45 points while the German DAX added 1.3 percent to 5685.61 points.
Analysts say Dubai is the case and not a systemic risk. British Prime Minister Gordon Brown said he debt problems of Dubai are normal and not crisised.