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Many have been a bit confused as to the reason for the downturn of the gold price last week. It has now emerged that apparently 380 tonnes of the stuff was ‘leased’ to the BIS (Bank of International Settlements) in exchange for foreign currencies.
It is now rumoured that it could be the IMF and cynics have suggested that the whole affair looks like a secretive European bailout that a single country wants to keep quiet.
To me, if this is true, there are three possibilities:
1. Spain
Last month European officials were forced to deny that the IMF, the European Union and US Treasury were drawing up a joint €250bn credit line for Spain.2. Portugal
The head of Portugese Banco Comercial Portugues, the largest private bank in Portugal, had to make a public statement denying the bank is on the verge of bankruptcy because of “hearsay from unscrupulous authors”.3. Greece
There is talk here that tomorrow Greece will be asking for more money. German courts are already fighting this possibility saying it goes against the rules of the Lisbon Treaty.Is the IMF now taking the ‘secret’ route so as not to rock the Euro?
For those interested in the article: http://www.telegraph.co.uk/finance/markets/7884272/Secret-gold-swap-has-spooked-the-market.html
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It wouldn’t surprise me if the rumour was true.
Over the last few weeks I have wondered whether secret arrangements were being made in eurozone to keep banks in some countries afloat. The other week eurozone banks paid a substantial part of the huge intrim loan that they had borrowed from the ECB for liquidity purposes. I was surprised that they had not asked for a roll over and so were the markets. That was one of the reasons why the euro rebounded in value.
I concluded that either things had picked up significantly for the good in the eurozone banking sector or that other things were in play which were being kept from the general public.
Richard
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Maybe they don’t need to do any deal with the IMF at the moment, they’re doing ok borrowing from the ECB.
Just announced on the Forex website:
“Spanish banks borrowed 126.3 billion Euros from the ECB in June, a 48 percent increase from the 85.6 billion Euros borrowed in May”.Wonder what the July figure will come to. 🙄
Didn’t Greece’s bailout only come to 110 billion Euros ❓
Am I losing the plot here or does that mean that in two months alone the Spanish banks have borrowed nearly twice as much as Greece’s total bailout? I must have gone wrong somewhere in the maths…… -
Maybe they don’t need to do any deal with the IMF at the moment, they’re doing ok borrowing from the ECB.
Just announced on the Forex website:
“Spanish banks borrowed 126.3 billion Euros from the ECB in June, a 48 percent increase from the 85.6 billion Euros borrowed in May”.Wonder what the July figure will come to. 🙄
Didn’t Greece’s bailout only come to 110 billion Euros ❓
Am I losing the plot here or does that mean that in two months alone the Spanish banks have borrowed nearly twice as much as Greece’s total bailout? I must have gone wrong somewhere in the maths…… -
Spanish banks ‘borrow record amount’ from ECB
14 July 2010 @ 13:38Spanish banks borrowed 126.3 billion euros from the European Central Bank in June, the Bank of Spain said on Wednesday, revealing a record figure as institutions here struggle to refinance on international markets.
The amount borrowed last month rose by 78.6 percent from the amount at the same time last year and represents a rise of 47.5 percent over the amount borrowed in May, figures published on the website of Spain’s central bank showed.
Spain is a member of the eurozone but is also in the front line of concern about the resilience of its banking system, and of concerns over the scale of public deficits and debt.
It was the highest amount borrowed in a one-month period by Spanish banks from the Frankfurt-based ECB since the Bank of Spain started publishing the figures when the eurozone was launched in 1999.
The rise in borrowing by Spanish banks comes as the total amount lent by the ECB to financial institutions in the entire 16-nation eurozone in June dropped to 496.7 billion euros (627.2 billion dollars) from 518.6 billion euros in May and from 615.9 billion euros during the same time last year.
Last month the Bank of Spain’s deputy governor Javier Ariztegui told a parliamentary commission that since Easter Spanish banks had been forced to seek financing from the ECB because of lack of market confidence in Spain.
“This situation can not last an eternity,” he said.
The health of Spain’s banking sector has been a source of concern for international investors since the collapse of a property bubble at the end of 2008 which had been a driver of over a decade of economic growth.
The solidity of Spanish financial institutions will be revealed when European officials publish bank stress tests on July 23.
EU regulators are examining the strength of 91 banks in an attempt to reassure investors about the institutions? resilience to potential losses as the debt crisis pummels the bonds of Spain, Portugal and Greece.
Fitch credit rating agency downgraded its long-term notation for Spanish bank Banco Popular by two notches on Wednesday and its short-term rating by one notch.
It said its decision was motivated by the effect of weak performance by the Spanish economy on the bank.
Source: Yahoo Finance
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Spanish banks ‘borrow record amount’ from ECB
14 July 2010 @ 13:38Spanish banks borrowed 126.3 billion euros from the European Central Bank in June, the Bank of Spain said on Wednesday, revealing a record figure as institutions here struggle to refinance on international markets.
The amount borrowed last month rose by 78.6 percent from the amount at the same time last year and represents a rise of 47.5 percent over the amount borrowed in May, figures published on the website of Spain’s central bank showed.
Spain is a member of the eurozone but is also in the front line of concern about the resilience of its banking system, and of concerns over the scale of public deficits and debt.
It was the highest amount borrowed in a one-month period by Spanish banks from the Frankfurt-based ECB since the Bank of Spain started publishing the figures when the eurozone was launched in 1999.
The rise in borrowing by Spanish banks comes as the total amount lent by the ECB to financial institutions in the entire 16-nation eurozone in June dropped to 496.7 billion euros (627.2 billion dollars) from 518.6 billion euros in May and from 615.9 billion euros during the same time last year.
Last month the Bank of Spain’s deputy governor Javier Ariztegui told a parliamentary commission that since Easter Spanish banks had been forced to seek financing from the ECB because of lack of market confidence in Spain.
“This situation can not last an eternity,” he said.
The health of Spain’s banking sector has been a source of concern for international investors since the collapse of a property bubble at the end of 2008 which had been a driver of over a decade of economic growth.
The solidity of Spanish financial institutions will be revealed when European officials publish bank stress tests on July 23.
EU regulators are examining the strength of 91 banks in an attempt to reassure investors about the institutions? resilience to potential losses as the debt crisis pummels the bonds of Spain, Portugal and Greece.
Fitch credit rating agency downgraded its long-term notation for Spanish bank Banco Popular by two notches on Wednesday and its short-term rating by one notch.
It said its decision was motivated by the effect of weak performance by the Spanish economy on the bank.
Source: Yahoo Finance
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Thanks for that Claire. I find it staggering that after all the hoo-hah surrounding Greece’s bailout – with all those EU leaders’ meetings/condemnations/terms&conditions/restrictions, public humiliation, German outcry etc. that went with it – plus comments like “that will teach the lazy Greeks to live recklessly above their means” ….even on this forum, that Spanish banks have calmly and quietly been borrowing these eye-watering amounts monthly that make Greece’s loan now seem like a cheap bun at a WI teaparty, and nobody seems to be saying a word. 😕
@Claire wrote:
Fitch credit rating agency downgraded its long-term notation for Spanish bank Banco Popular by two notches on Wednesday……
Now that bank name seems familiar (Banco Popular Hipotecario is the mortgage-lending arm of Banco Popular) ring any bells Claire? 😆
That will teach them to lend to developers involved in building dodgy developments with dodgy building licences! -
Thanks for that Claire. I find it staggering that after all the hoo-hah surrounding Greece’s bailout – with all those EU leaders’ meetings/condemnations/terms&conditions/restrictions, public humiliation, German outcry etc. that went with it – plus comments like “that will teach the lazy Greeks to live recklessly above their means” ….even on this forum, that Spanish banks have calmly and quietly been borrowing these eye-watering amounts monthly that make Greece’s loan now seem like a cheap bun at a WI teaparty, and nobody seems to be saying a word. 😕
@Claire wrote:
Fitch credit rating agency downgraded its long-term notation for Spanish bank Banco Popular by two notches on Wednesday……
Now that bank name seems familiar (Banco Popular Hipotecario is the mortgage-lending arm of Banco Popular) ring any bells Claire? 😆
That will teach them to lend to developers involved in building dodgy developments with dodgy building licences! -
Banco Popular certainly rang bells for me Charlie. Didn’t give me quite the same headache that it did a few years back! 😉
Some guy on Newsnight last night reckoned the Euro was as strong as ever and he didn’t see it going anywhere sometime soon. (words to that effect). Everyone seems to have a different viewpoint. 😕 😕
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Banco Popular certainly rang bells for me Charlie. Didn’t give me quite the same headache that it did a few years back! 😉
Some guy on Newsnight last night reckoned the Euro was as strong as ever and he didn’t see it going anywhere sometime soon. (words to that effect). Everyone seems to have a different viewpoint. 😕 😕
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World markets are reliant on the stability and resilience of the German economy. Germany is in effect underwriting the rest of Europe. As long as that continues Spain and the remaining Eurozone will survive for as long as it takes to turn around their own economies.
However that said Merkle’s political position is by no means secure. There is huge opposition among the German people. They see the rest of Europe as profligate whilst they themselves have lived in relative austerity for more than 10 years.
Should there be a change of government in Germany, elected on the back of EU opposition then the Eurozone and Spain will have huge problems.
I believe that is why the IMF and ECB are doing secret deals to bail out Spain. I have absolutely no doubt that they are.
Spain is effectively bankrupt with no immediate or mid term prospect of recovery.
If the true status of the Spanish economy and the assistance it needs was revealed, panic would set in.
The German electorate would pull the plug on their government the rating agencies would downgrade Spanish bonds to junk status and investors would head for the exits.
The whole Eurozone house of cards would tumble. Secrecy is simply lying by omission. That is the reality default position in the modern European Union.
It beats me though why world markets constatly fall for it. Making a quick buck can be the only explanation. They are in for a dramatic fall. -
World markets are reliant on the stability and resilience of the German economy. Germany is in effect underwriting the rest of Europe. As long as that continues Spain and the remaining Eurozone will survive for as long as it takes to turn around their own economies.
However that said Merkle’s political position is by no means secure. There is huge opposition among the German people. They see the rest of Europe as profligate whilst they themselves have lived in relative austerity for more than 10 years.
Should there be a change of government in Germany, elected on the back of EU opposition then the Eurozone and Spain will have huge problems.
I believe that is why the IMF and ECB are doing secret deals to bail out Spain. I have absolutely no doubt that they are.
Spain is effectively bankrupt with no immediate or mid term prospect of recovery.
If the true status of the Spanish economy and the assistance it needs was revealed, panic would set in.
The German electorate would pull the plug on their government the rating agencies would downgrade Spanish bonds to junk status and investors would head for the exits.
The whole Eurozone house of cards would tumble. Secrecy is simply lying by omission. That is the reality default position in the modern European Union.
It beats me though why world markets constatly fall for it. Making a quick buck can be the only explanation. They are in for a dramatic fall. -
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Can anyone explain why there seems to be not a single beep regarding Italy? Is it because Belusconi controls everything including all media?
Despite having a falling economy (industrial production and exports down), the Government has just announced that 2010 and beyond will bring higher growth rates (+0.7% to +1.1%).
Neither the silence in the press, nor the Government’s growth predictions seem to make sense – or are they also doing deals behind closed doors with the ECB/IMF?
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Can anyone explain why there seems to be not a single beep regarding Italy? Is it because Belusconi controls everything including all media?
Despite having a falling economy (industrial production and exports down), the Government has just announced that 2010 and beyond will bring higher growth rates (+0.7% to +1.1%).
Neither the silence in the press, nor the Government’s growth predictions seem to make sense – or are they also doing deals behind closed doors with the ECB/IMF?
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@charlie wrote:
Can anyone explain why there seems to be not a single beep regarding Italy? Is it because Belusconi controls everything including all media?
Despite having a falling economy (industrial production and exports down), the Government has just announced that 2010 and beyond will bring higher growth rates (+0.7% to +1.1%).
Neither the silence in the press, nor the Government’s growth predictions seem to make sense – or are they also doing deals behind closed doors with the ECB/IMF?
The principal reason why there is less concern over Italy’s debt is because the country is regarded as more capable of turning it’s economy around. This may or may not be true. It does have a fairly strong manufacturing base in the north and a solvent banking system. However I am sceptical. Massaging figures in Italy is a national sport.
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@charlie wrote:
Can anyone explain why there seems to be not a single beep regarding Italy? Is it because Belusconi controls everything including all media?
Despite having a falling economy (industrial production and exports down), the Government has just announced that 2010 and beyond will bring higher growth rates (+0.7% to +1.1%).
Neither the silence in the press, nor the Government’s growth predictions seem to make sense – or are they also doing deals behind closed doors with the ECB/IMF?
The principal reason why there is less concern over Italy’s debt is because the country is regarded as more capable of turning it’s economy around. This may or may not be true. It does have a fairly strong manufacturing base in the north and a solvent banking system. However I am sceptical. Massaging figures in Italy is a national sport.
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