The end of dollar oil-linking

Secret talks have already been held by Arab states, China, Russia, Japan and France to make an end on dollar oil-linking. Instead using the dollar for oil trading, the countries concerned would switch to a basket of currencies including the euro, gold, Chinese yuan, Japanese yen end a unified currency of the Gulf States. During the transitional period, gold would be the currency unit. Mohammed al-Dschassir, one of the top leaders, denied everything about the proposition ‘dropping the dollar for oil trading ’ when asked to comment by journalists.


Charlotte Vanderstraeten

De Tijd

Stock recovery too soon and too strong, causing a risk of correction

The stocks have been rising too quickly and too heavily since their lowest point in March, causing a risk of correction. The real economy is hardly recovering whereas the markets are going up strongly according to New York University-professor Nouriel Roubini who sees a growing gap. He fears that soap-bubbles are being blown due to government intervention. Stocks need gradual growth equal to economic growth to avoid the creation of financial bubbles and the risk of correction.

Nico Vermeulen
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ECB is from mars and Fed is from Venus?

It’s the title of a research note published by economics from Deutsche bank, which explains why the ECB and the Federal Reserve acted so differently during the economic crisis.
While the ECB raised interest rates to attack inflation, the Fed thought about growth in the first place and waited to give the economy more time to recover.
The research note says that the differences between the central banks can’t be caused by the difference in economic climate, because everybody knows that due to globalization, the economic climate has become worldwide.
It points out that the differences could be explained if we look at the economic history of both regions. In the United States the biggest economic trauma is without any doubt the economic crisis of the thirties, while in Europe the hyperinflation in Germany after world war I had a bigger impact.
Eva Van Belle
Source: http://blogs.wsj.com/economics/2008/07/03/ecb-and-fed-worlds-apart/

Do(o)mino-day one year later

Since Lehman Brothers has filed for bankruptcy, the financial fallout has been initiated and a seemly endless series of other banks have undergone the same fate. Banks who have invested in real estate loans and collateralized mortgages obligations are forced to take losses and write-downs, which affects the profitability, liquidity and solvency of the banks. Recently Jennigs State Bank of Spring Grove, Warren Bank of Warren and Southern Colorado National Bank of Pueblo have filed for chapter 11 which brings the tally up to 98 bank failures in the USA for this year alone. Thinking that we are over the top of this economic crisis is being too optimistic, some doom-mongering analysts think that around 500 banks will go bankrupt within the next two years.

Nico Van Steenkiste

Bloomberg
Tradingmarkets.com

Hustle and bustle at World Bank

The World Bank is reaching its financial limits as it is squaring up to the financial crises. In order to restore the deep cracks in the economy of the needing countries, the call for capital increases sharply. Therefore a higher contribution from the countries is needed. At the beginning of 2010 there has to be a proposal finished with details to obtain the extra amount of capital.

Sofie Van Dun

America’s battle against global depression

The US economy is still fighting for a swift turn in the past years’ financial chaos. As the industrial production hasn’t been able to come up to the expected growth, consumers’ trust has hit a low. Consequently the American savings ratio keeps on increasing even more and the country’s unemployment figure is the highest of the past 24 years. Will America get out of this bad dream and pull itself together or will they have to face the same absolute low as in the thirties?

Jens Verschaeve

Banks, dues and governments

In the short term, BNP Paribas will repay the French government the support it got due to the financial crisis. By issuing € 4,3 billion in stocks, BNP Paribas wants to pay off most of the stocks from the French government. Not France, but Belgium will be the largest stockholder of BNP Paribas, if the deal goes on. Even though Belgium will become the largest, it will have to participate in the increase of capital of BNP Paribas to prevent its position in the Frech bank from weakening.

Andries Geers

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