British Families’ Euro Bailout Share Is $1,050
London, England, United Kingdom (AHN) – Because of Britain’s commitment to help bail out European Union countries facing financial difficulties, British families could have to shell out $1,050 (GBP 700) as their share despite already having to tighten their own belts.
The $1,050 is on top of yearly contributions of Britain to the EU and a potential UK liability of $60 billion (GBP 40 billion) for the eurozone bailout.
However, assurance of an international bailout to Ireland and Greece has not placated the markets, as the contagion has started to spread to Portugal, Spain and Italy. On Wednesday, borrowing costs for Portugal went up to 5.3 percent from 4.8 percent two weeks ago for buyers of the $627 million (GBP 418 million) 12-month Portuguese bonds on the table.
After the auction, ratings agency Standard & Poor’s warned Lisbon it may cut Portugal’s credit rating. By evening, S&P placed Portugal’s debt on negative credit watch and said it may further downgrade Lisbon’s A-minus rating in three months.
The worsening currency crisis has prompted the U.S. Treasury to send a representative to Europe this week to sit down with the governments of German, Spain and France.
The nervousness of the markets over the situation in the eurozone has fueled speculation that the European Central Bank could increase the bailout funds, which would translate into higher costs and liabilities for EU residents.
View full post on All Stories
EU facing fundamental change in debt crisis
BRUSSELS, Belgium – Europe and the euro will never be the same.
View full post on All Stories
US Dollar rises: Thanks Europe!
Critics who worried that QE2 would crush the dollar have been silenced, thanks in part to a widening debt crisis in Europe.
View full post on All Stories
Red-Berry Day in Gaza, as Farm Products Leave for Europe
Gaza, Palestinian Territory (TML) – Um Hajjar Al-Ghalayini, 46 years old, owns half an acre of sandy Gaza land that produces two tons of strawberries every season. Since her husband died two years ago, the crop is the sole means of support for her nine children, mother-in-law and widowed sister, so every one of the bright red berries counts.
Last year, she had no choice but to sell her produce to the local market. That filled the Gaza markets with fruits and vegetables to the benefit of consumers, but for growers like Um Hajjar it was a disaster. Her earnings dropped by more than half and the family had a tough year economically. This week, as Israel took another step in easing its economic blockade of the Gaza Strip, Um Hajjar delivered her strawberries to the Kerem Shalom checkpoint on the Israel-Gaza border, their first leg of a journey to the more profitable markets in Europe.
“Now I can say that things are getting back to normal, if not on the right track,” she told The Media Line.
Exports of strawberries and flowers from the Gaza Strip to European markets began on Sunday, as part of a wide-ranging project coordinated by the Israeli army and local farmers and funded by the Dutch government. The current undertaking involves some 2.5 tons of strawberries and some 2,000 flowers, but Israel plans expanded facilities at Kerem Shalom and stepped-up security measures that will enable exports to grow more next year.
All told, about 700 tons of strawberries and 30 million carnations will be exported from Gaza by the time the season ends – in February for strawberries and May for flowers — Yousef Shaath, the project manager of the Dutch-funded Agricultural Relief Committee in Gaza, told The Media Line.
Strawberries are just one part of a gradual easing of the blockade Israel imposed on Gaza, a Mediterranean enclave of just 360 square kilometers (138 square miles), in 2007 after the Islamic militant group Hamas seized control. Israel used the siege to pressure Hamas, which unlike the Fatah-controlled Palestinian Authority (PA) that rules in the West Bank, is sworn to Israel’s destruction and rejects peace talks.
While Israel and Hamas are still at loggerheads, Jerusalem has loosened some aspects of the blockade since nine people were killed last May when commandoes raided a ship trying to break the siege. As a result, Gaza’s economy will probably grow 8% this year, according to the International Monetary Fund.
While human rights advocates have focused on the pain caused by Israel’s blocking most imports, Gaza’s tiny economy has suffered by the ban on nearly all exports as well. According to the Palestinian Bureau of Statistics, Gaza’s exports plunged from $41 million in 2005 to $30,000 in 2006 and $20,000 in 2007. In 2008, virtually nothing left the Strip.
The business of export agricultural produce is fraught with politics, business and security issues. Before the first strawberries and carnations could be trucked into Israel, representatives of the Gazan agricultural associations met last week with an Israeli agriculture coordinator, a representative of the Israeli farm-export company Agrexco and the deputy ambassador of the Netherlands in Tel Aviv at the Erez crossing point between Gaza and Israel last week.
That is because the produce has a long and complicated route to get from fields like Um Hajjar and into a French housewife’s strawberry shortcake.
Hamas as the de facto ruler of Gaza had to approve the exports, but because Israel and the European Union don’t recognize the Islamic organization as the official government, representatives of the PA had to act as intermediaries. Indeed, at Kerem Shalom the PA will have an official presence as the produce moves over the border to Israel.
Israel will also need to deploy scanning machines that can x-ray cargo containers and ensure that terrorists or arms aren’t being smuggled out of Gaza. Israel has been wary about letting goods leave Gaza after two Palestinian teenagers infiltrated the Israeli port of Ashdod in 2004 by hiding in a shipping container. They blew themselves up, killing 10 people.
But Israel’s security needs have to be measured against the need for perishable produce and flowers to reach their final destination in Amsterdam and other points in Europe. Last year, Gaza suffered big losses when Israel delayed export permission by two months.
As well, farmers, in particular flower growers, need a host of inputs as well as packaging materials, which require Israeli approval to be imported.
The exports underway these days, however, aren’t enough for Gaza farmers, who form a major component of the Strip’s economy. About 900 acres is devoted to growing strawberries, which will yield a harvest of 1,000 tons, about 40% more than the current export quota. Gazans grow a cornucopia of other fruits and vegetables as well. Their natural market is Israel or the West Bank, but so far Israel has barred sales to those markets. Shaath said this is unfair as Israel now exports some $3400 million of produce to Palestinian areas and under the Oslo peace accord should accept Palestinian imports in return.
Nevertheless, Shaath is sanguine about next year’s export prospects. Gaza crops tend to mature earlier than competing ones, so that if the complicated chain of political and security arrangements can be preserved and developed, the Strip’s farmers will be the first on the market.
View full post on All Stories
Australia, NZ dollars plumb lows as risk shed; bonds firm
The Australian dollar sank to two-month lows on Monday as a faltering euro led investors to shun riskier currencies on doubts the bail-out for Ireland would not plug Europe’s debt crisis.
View full post on All Stories
Hooking Up Unserved Pockets of Europe to High-Speed Internet
Broadband satellite providers are gearing up services for the 30 million households in Europe for which high-speed Internet is unavailable.
View full post on Business Stories
EU backs Irish bailout, outlines resolution plan
BRUSSELS (Reuters) – The EU approved an 85 billion euro ($115 billion) rescue for Ireland on Sunday and outlined a permanent system to resolve Europe’s debt crisis, in which investors could gradually share the cost of any future default.
View full post on All Stories
Euro zone crisis puts SA business in jeopardy
Earlier this year, the EU and the International Monetary Fund (IMF) organised a e110 billion (R1.04 trillion) bailout for Greece. This week, Ireland has accepted around e90bn to help save it from bankruptcy. What does this mean and what implications does it have for Europe? |||
Earlier this year, the EU and the International Monetary Fund (IMF) organised a e110 billion (R1.04 trillion) bailout for Greece. This week, Ireland has accepted around e90bn to help save it from bankruptcy. What does this mean and what implications does it have for Europe?
As a result of the Greek crisis and the fear of a continuing recession across Europe, the EU has set up two funds, contributed to by the 16 euro zone countries, to support EU member economies in danger of going bankrupt. EU countries, such as Ireland, can also source funds from elsewhere, as they are doing with the IMF and through bilateral arrangements with the UK and Sweden.
Countries go bankrupt when their budget deficit (difference between spending and earning) is too high, leaving them with insufficient funds to manage their economies, as in the case of Ireland.
After initially saying that it would not need a bailout, Ireland accepted separate offers from the UK, the IMF, Sweden and the EU funding programmes.
Ireland remains a major importer of UK products; on average, every Irish citizen spends approximately £3 600 (R40 000) on British goods every year. Were the Irish economy to crash, this would have severely negative effects on the British industry and economy.
But the effect is larger than this.
As the EU has agreed to perfect mobility of labour across borders and a common currency, the collapse of one of its members is indirectly carried by the more successful members. If one country’s economy collapses, businesses fail and unemployment rises. In terms of currencies, failing EU countries are less desirable places to invest, which makes the euro less attractive. This depreciates the euro and affects the economy of all EU states, even the successful ones.
But what are the consequences of these bailouts or loans? The borrowers need to repay the loans, so they need to raise the money to do so, which often results in them raising taxes.
In Ireland’s case, this would be especially damaging as its low company taxes make it attractive for international business. The expense of the loan will put massive pressure on its government spending policy and will make its future cost of borrowing even higher.
The lenders, on the other hand, sit with a catch-22 situation. They can’t allow member states to collapse, but bailing them out requires raising and spending huge funds of their own. Even if they will be repaid, this still imposes huge costs upon their own spending and economic policies.
The bigger worry is how long this strategy can continue. Bailout funds are limited and Spain, Portugal and Italy are all sitting with dangerously high budget deficits. If one of them was to require a bailout, similar to that of Greece or Ireland, there may not be enough money available to help the others. Were their economies to collapse, the knock-on effects on the whole EU economy could make the current bailout policies completely ineffective.
Since the EU is one of South Africa’s major export markets (valued at more than e22bn a year), every South African should be concerned about the success of the EU. A collapse of its economies would cause significant collapse of businesses within South Africa.
Pierre Heistein is the convenor of the UCT Applied Economics for Smart Decision Making course, which starts in March. The course is presented by GetSmarter, www.getsmarter.co.za.
View full post on All Stories
Ireland to get €85bn banking loan
Potential bailout followed comments by the world’s biggest bond investor virtually inviting depositors to withdraw their money
Ireland is to be offered an €85bn (£72bn) loan from the IMF and the EU to bail out its banks and fund its public finances.
In a deal expected to include a contribution from the UK taxpayer of up to £10bn, the crippled banking sector is to be recapitalised, effectively taking Allied Irish Banks into state control and giving the government a majority stake in Bank of Ireland.
According to Irish broadcaster RTÉ, the banks will be forced to push up their capital cushions from 8% to 12% in a move that should boost confidence in the banking sector that has been suffering big deposit outflows.
RTÉ said €48bn would be used to fund the government deficit over the next three years, with €15bn-20bn to recapitalise the banks, and an extra contingency fund of €20bn.
The potential bailout of the banking system followed comments by the world’s biggest bond investor, virtually inviting depositors to take their money out of Ireland’s stricken banks.
EU authorities will be hoping the speed with which the deal appears to have been agreed will calm the markets, where there have been fears that Portugal could also need a bailout, and even Spain.
Markets were febrile yesterday, with the euro plunging more than two cents against the dollar and share prices falling heavily in Europe and North America.
Tensions between North and South Korea further strained nerves, while Germany admitted that the future of the euro was at stake through the Irish bailout.
Mohamed El-Erian, chief investment officer of the powerful bond manager Pimco, fuelled anxiety about the health of the banks yesterday by describing Ireland’s banks as “bleeding deposits”.
He said: “What you advise your sister in Ireland now is that you’d say take your money out of an Irish bank and put it in another bank headquartered elsewhere.
“That’s what happened in Argentina and in emerging economies. People worry about their savings.”
Ireland’s central bank had immediately denounced Erian’s remarks by saying there was “no basis for concern” and all deposits were guaranteed by the government. But the central bank’s admission that major international firms had been withdrawing their funds from Ireland highlighted the anxious mood of the markets on the eve of the government’s four-year fiscal plan, which is a crucial component on the deal with the IMF and EU.
Erian, who was interviewed by the Bloomberg news agency, said Ireland needed to conclude those negotiations to restore confidence in the banking system.
“It will seriously undermine the prosperity of this country for a generation. The first thing they must do is execute on what they announced this weekend, which is a big external aid package and steps by the Irish government,” he said.
According to RTÉ, Ireland’s banks will be made considerably smaller and the bad loans will be taken out of the troubled UK arm of AIB in an attempt to allow the operation to be sold off.
Irish bank shares had been hit hard before details of the package leaked and central bank boss Patrick Honohan had invited bidders. “They [the banks] are for sale as far as I am concerned. I have been an advocate for a number of years for small countries to have foreign owners for their banks,” he said. US billionaire Wilbur Ross said he was “very far along” in the process of buying a bank.
Ireland’s woes prompted concerns that the authorities had failed to use the Republic as a firebreak for the crisis which now risks enveloping Portugal and even Spain. The cost of borrowing for both countries rose yesterday. Spain did not manage to raise as much money as it had hoped in its regular bond auction and was forced to pay more to raise the funds.
Jim O’Neill, chairman of Goldman Sachs Asset Management, warned that the Irish rescue package did not solve the problems at the heart of the single currency.
Other market experts were also concerned about the eurozone. Graham Turner of GFC Economics said the solution for weak members might be for Germany to walk away from the single currency.
He suggested that Austria, Finland, the Netherlands and Germany could form a new deutschemark bloc which would allow the other 12 members of the eurozone to devalue and reflate their way out of the crisis. “It has to be a better option than the present straitjacket of a single currency,” said Turner.
In Europe, London’s FTSE 100 index closed 95 points (1.8%) lower at 5581.28 while Germany’s DAX tumbled 1.7% and the CAC-40 in France ended 2.5% lower. Spain’s Ibex closed down 2.8% and Portugal’s PSI 2.1%.
The euro fell to its lowest level in two months of 1.3377 against the dollar.
The German parliament was told of the gravity of the situation by finance minister Wolfgang Schäuble. “Our common currency is at risk,” he said, if Germany did not play its part in bailing out Ireland. Without participation, the “economic and social consequences for our country will be incalculable”. Chancellor Angela Merkel echoed his remarks, saying: “We’re in an extraordinarily serious situation.” Ireland bailout European debt crisis Ireland Euro Currencies Banking European banks Euro European Union Economics Banks and building societies Jill Treanor Larry Elliott guardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds
View full post on All Stories
Europe Races to Aid Ireland
Irish Prime Minister Brian Cowen insisted that his government remains responsible for Ireland’s forthcoming budget plan to save €15 billion over four years, and said talks on a possible aid package were “going well.”
View full post on Business Stories
-
Day Trading Guide- Cannes Fashion Show to feature Alexander Wang, Roberto Cavalli
- “Banana Aids” threatens social fabric on Idjwi island
- Eaton buys Cooper Industries for $11.8 billion
- The GAP gets its groove back with earnings uptick
- Facebook opens at $42
- U.S. adds anti-dumping tariffs to Chinese solar panels
- Fitch downgrades Greek sovereign debt
- Clinton urges Americans to invest in Myanmar, names ambassador
- Gambia: Small country with a big crisis
- Verizon ending unlimited data for phone upgrade
- Trade Online, Online Opportunities
- Business Credit Information
- Honda widens recall for airbag problem
- GM CEO: Earnings good, but not good enough
- Chinese companies buying automaker Saab
- Suzuki demands VW return shares after alleged contract breach
- Chrysler has best September since 2007
- Honda recalls million cars worldwide
- General Motors to manufacture plug-in Cadillac ELR plug-in hybrid electric car
- GM earnings soar 92 percent on global sales
- Volkswagen postpones MAN supervisory board takeover
- Business Loans
- Consumer credit card debt down
- Remittances to developing countries rebound
- Fixed mortgage rates steady near 4 percent
- Bank fee hike gives credit unions a boost
- Study: Canadians want to retire at 63
- Study: Growing number of college grads filing for bankruptcy protection
- Survey: Canadians expect to be free from debt when they reach 55
- Monthly Payments Lowered on Defaulted Debt?
- Number of hacked Citi credit card accounts rises to 360,000
- Virgin Atlantic pilots vote to strike over lack of pay increase
- Private Personal Loans
- personal loans
- Fitch downgrades Greek sovereign debt
- U.S. Treasury should make $15 billion profit on AIG bailout
- Costco to offer mortgages
- Medicare to tie doctors’ pay to quality, cost of care
- Report: E-books encouraging reading in America
- Justice Dept. Broadens Investigations of Terrorism in Private Records
- Gold falls following Fed policy decision
- Average rate on 30-year fixed mortgage falls to 3.9 percent
- Stocks cross 13,000 for first time since May 2008
- CIA site down, Anonymous claims responsibility
- Personal and Business Loans
- Initial jobless claims remain unchanged
- Fitch downgrades Greek sovereign debt
- Moody’s downgrades credit of 26 Italian banks
- Initial unemployment claims drop by 1,000
- Fannie Mae not seeking new bailout funds after good quarter
- Mortgage rates fall to record low
- Spain, economic data weigh on U.S. stocks
- Costco to offer mortgages
- U.S. stocks mixed Thursday on weak jobless claims
- Short sales up in housing market
