Fifteen of the biggest global banks were downgraded on Thursday by Moody’s Investors Service, adding to pressure on their borrowing costs and questions over their business models.
Italy's prime minister, Mario Monti, has warned of the apocalyptic consequences of failure at next week's summit of EU leaders, outlining a potential death spiral whose consequences would become more political than economic.
Spain’s troubled banks could need as much as €62 billion ($78.6 billion) in new capital to protect themselves from economic shocks, according to independent auditors hired by the government to assess the country’s struggling financial sector, officials said Thursday.
The latest relief rally in European financial markets was over almost before it began.The market’s tepid response on Monday to Greece’s supposedly momentous election of a pro-bailout party points to a hard truth. Investors will not stop punishing Europe until its leaders devise a comprehensive program with a lot more money to backstop the Continent’s banks and governments.
New York Times
Stocks and bond yields fell as the data reinforced concerns the recovery is faltering after Fed policy makers yesterday cut their growth forecasts and extended a program to keep long-term interest rates low. Another report today showed sales of existing homes fell in May, indicating that tight credit and the weakest employment gains in a year are holding back residential real estate.
The whales of our current economic society swim mainly in financial market oceans. Innovators such as Jobs and Gates are as rare within the privileged 1% as giant squid are to sharks, because the 1% feed primarily off of money, not invention. They would have you believe that stocks, bonds and real estate move higher because of their wisdom, when in fact, prices float on an ocean of credit, a sea in which all fish and mammals are now increasingly at risk because of high debt and its delevering consequences. Still, as the system delevers, there are winners and losers, a Wall Street food chain in effect.
Bill Gross, PIMCO