Category: Resources

Moody’s downgrades top three French banks

Linda Young – AHN News Writer

Paris, France (AHN) – Moody’s announced Friday it was downgrading the credit rating of all three of France’s top banks because of the difficulty they have borrowing money.

Credit Agricole and BNP Paribas went down one notch from a Aa2 rating to Aa3, which is the fourth-highest investment grade rating. Societe Generale fell from Aa3 to A1, the fifth-highest rating. The best rating a bank can get is AAA.

BNP is the largest bank, Societe Generale is second and Credit Agricole is third.

The credit rating agency also gave each of the three a negative outlook and warned that it might downgrade them again.

Moody’s said that not only had liquidity and funding conditions deteriorated at each of the banks, but that it was likely the situation would become worse because of further funding pressures from the European debt crisis, which has deteriorated.

The ratings cuts for these three banks follow Moody’s previous downgrades in September of Credit Agricole and Societe Generale.

Part of the problem with liquidity comes from the fact that many money market funds in the United States have refused to lend to European banks since the summer. That has made it difficult for eurozone banks to maintain borrowing in U.S. dollars.

The European Central Bank on Thursday announced new measures to make sure that eurozone banks do not run out of cash.

During the past few months, both BNP and Societe Generale announced asset sales aimed at reducing their reliance on short-term wholesale funding.

However, Moody’s cautioned that if too many European banks try to sell assets at the same time it would depress their value and result in selling them at a loss.

Article © AHN – All Rights Reserved

View full post on All Stories

U.S. stocks up on shortened Friday trading session

Diane Alter – AHN News Reporter

New York, NY, United States (AHN) – U.S. stock markets will close at 1 p.m. on Friday having many investors joking they have only a half a day to lose half as much money.

Just after the opening bell, the Dow Jones Industrial Average rose 58 points, the Standard & Poor’s 500 Index was up 7 points and the NASDAQ was better by 11 points.

Oil was down 21 cents at $95.84 a barrel, and gold was trading lower by $17 at $1,679.10 a troy ounce.

Weighing on markets were continued fears about the eurozone debt crisis. Yields on Italy’s debt neared recent highs and spooked world markets, sparking a sell-off overseas. Italy paid a record 6.5 percent to borrow money over six months on Friday. Longer term funding costs in the Italian nation soared well above levels seen as sustainable for public finances.

Investors all over the globe are frightened that economic ills in Italy, Spain, Greece and France will spill over into Germany, regarded as the most financially stable eurozone country.

With little on the economic calendar in the shortened trading session, investors were buoyed by signs that Black Friday deals will help retailers post strong profits over the Thanksgiving weekend.

Article © AHN – All Rights Reserved

View full post on All Stories

Europe’s lust for gold continues

Diane Alter – AHN News Reporter

New York, NY, United States (AHN) – Despite rising and record prices, gold continues to shine, especially overseas. The European sovereign debt crisis has spurred a gold rush across the continent. The World Gold Council reported Thursday that investors in Europe purchased a record $6.2 billion in gold bars and coins in the third quarter.

While not a record in terms of weight, Europe’s demand for about 118 metric tons of the yellow metal in the third quarter amounts to nearly a third of all the investment grade gold demand around the world for the period. It is also a 135 percent increase in demand from Europe from the same period a year ago.

Worldwide, demand for gold bars and coins was up 29 percent from a year earlier.

The increase in demand was not deterred by record high gold prices. Prices for the precious metal surged 20 percent in July and August, and topped record highs above the $1,900 an ounce mark. It has since fallen back a bit.

While inflation worries, hedges, diversification and geopolitical factors are main drivers of gold, economic uncertainties and looming defaults of European nations were the main push behind the recent rush to gold.

And it wasn’t just investors who were paying for gold. Even foreign central banks increased their buying, adding 148.4 tons of the yellow metal in the quarter, up from 22.6 billion tons a year ago.

Some analysts question gold’s stellar run and wonder if the precious metal will continue to shine. Global demand for jewelry, which typically accounts for about two-thirds of all gold demand, fell 10 percent year-over-year and is sitting near its lowest level in 25 years. And gold supply is increasing.

But those figures don’t sway die-hard gold bugs who say the sky is the limit for gold.

On Thursday, in afternoon trading, the gold was down $47 to $1,716 a troy ounce in what some traders were calling profit taking.

Article © AHN – All Rights Reserved

View full post on All Stories

Italian debt reaches unsustainable level

Vittorio Hernandez – AHN News

Rome, Italy (AHN) – When Italy’s debt ballooned to over $1.5 trillion, some leaders are now asking if the country has reached a point of being beyond rescue. The offer by Italian Prime Minister Silvio Berlusconi to resign from his post had failed to slow down the financial turmoil.

Another indicator that Italy’s debt has reached unsustainable level is that the interest rate on Italian bonds hit 7 percent which is the same rate that smaller eurozone economies such as Ireland, Portugal and Greece reached and needed a rescue. At one point, the rate even reached 7.5 percent.

Because of the impact of the problematic eurozone members on the whole single currency area, instead of kicking out Greece and eventually Italy from the zone, Germany and France reportedly are scouting for ways to leave the currency.

Even non-eurozone members such as Britain are affected by the debt crisis that the United Kingdom faces a threat of a double dip recession before the end of 2011. Because of the impact of the Greek and Italian debt crisis on Britain, British Prime Minister David Cameron urged the leaders of the two nations to get on top of their countries’ debts and deficits.

Cameron also suggested putting in place the largest possible firewall, which is what the European Financial Stability Facility was supposed to be. However, lack of interest failed among the markets failed to boost the fund’s firepower.

Amid the political and financial turmoil besetting Italy, the Italian stock market lost 4 percent of its value, the FTSE 100 index closed 106.96 points down at 5460.38 and the Dow Jones closed 389 points down at 11,780.94.

Article © AHN – All Rights Reserved

View full post on All Stories

Greek cabinet supports Papandreou’s referendum plan, markets fall in panic

Vittorio Hernandez – AHN News

Athens, Greece (AHN) – The Greek cabinet supported on Tuesday Prime Minister George Papandreou’s plan to submit the European Union (EU) debt deal to citizens although the rescue package may place the country in a worse financial situation.

Papandreou said the referendum results will represent a clear mandate on how Greeks want the government to approach the country’s debt problem and future use of the euro currency. Papandreou promised to abide by the referendum results.

Prior to the referendum, Papandreou’s Socialist Party will submit itself to a confidence vote before the Parliament on Friday.

European leaders were surprised with Papandreou’s plan to submit the debt deal to a referendum vote. The French and German governments, which are the largest holders of Greek debts, wanted the rescue deal implemented at the soonest possible time.

News of a referendum, which would likely reject the deal because it carries another round of austerity measures, sent markets to panic and the European debt crisis back to square one after a week of intense EU leaders’ meeting in Brussels.

The FTSE closed down 2.2 percent at 5421 after it initially declined 5 percent. Both the German Dax and French Cac indices dipped 5 percent at closing time, and the Dow Jones closed down by almost 2.5 percent.

French President Nicolas Sarkozy and German Chancellor Angela Merkel will meet with EU and International Monetary Fund officials on Wednesday in Cannes. Papandreous will also meet with Merkel and Sarkozy on the sidelines of the G20 Summit in France.

Article © AHN – All Rights Reserved

View full post on All Stories

New fed rules to aid more underwater homeowners

Diane Alter – AHN News Reporter

Washington, DC, United States (AHN) – Monday morning the Federal Housing Finance Agency announced new rules that will allow many more “underwater” homeowners, those who owe more than their properties are worth, to refinance at current historical low mortgage rates.

Up to a million borrowers are expected to take advantage of the new program, the FHFA estimates. Originally rolled out in early 2009, the program has fallen far short of the number of people it was expected to help.

Prior to the new rules, only borrowers who owed more than 25 percent more than their homes are worth could participate in the program. The new rules have no cap on how much a borrower owes.

Only mortgages backed by Fannie Mae and Freddie Mac will be eligible under the new rules.

Officials hope the new rules will help the ailing housing market and the flailing economy. By reducing monthly payments, more homeowners will hopefully avoid foreclosure and have more cash to spend, giving a much-needed boost to the depressed economy.

Article © AHN – All Rights Reserved

View full post on All Stories

Oil, Copper Futures Rise on G20 Talks

Jupiter Kalambakal – AHN News Reporter

London, United Kingdom (AHN) – Oil and copper futures posted gains on Monday amid wrap-up talks among G20 finance chiefs where parts of a plan to contain the eurozone’s debt crisis and prevent a possible Greek default were approved over the weekend.

Copper metal for delivery rose 1 percent to $7,619.50 a metric ton on the London Metal Exchange, the biggest increase since Sept. 27.

Copper for December delivery on the Shanghai Futures Exchange advanced 0.7 per cent to $8,846 a ton.

On one end, oil futures jumped by as much as 1.1 percent, maintaining advances from the biggest close in almost a month. Monday’s figures improved oil’s 4.6 percent growth last week.

Crude for November delivery edged up as much as 91 cents to $87.71 a barrel in electronic trading on the New York Mercantile Exchange. It progressed at $86.80 on Oct. 14, the biggest close since Sept. 20. Prices were down 4.3 per cent this year.

Meanwhile, Brent oil for December grew 45 cents, or 0.4 per cent, to $112.68 a barrel on the London-based ICE Futures Europe exchange.

Article © AHN – All Rights Reserved

View full post on All Stories

Americans favor raising tax rate on wealthy to help nation says survey

Linda Young – AHN News Writer

Washington, D.C., United States (AHN) – A majority of Americans favor raising taxes on wealthy people as a way to reduce the national debt.

Pew Research found that 67 percent of Americans approve of raising the tax rate on those with incomes over $250,000.

That figure is slightly higher than the 66 percent who favored that idea in May.

Only 30 percent say they do not approve of raising the tax rate for wealthy Americans with incomes above $250,000.

Broken down by political affiliation, 82 percent of Democrats support such a tax increase, as do 67 percent of independents while only 47 percent of Republicans support a higher tax on the wealthy.

Pew researchers also polled people on their confidence in Republican Congressional leaders to do the right thing when it comes to dealing with the federal deficit.

Only 35 percent of those surveyed say they have a great deal or fair amount of confidence in Republican leaders, which was down from 47 percent in May. Moreover, 62 percent say they have little or no confidence in the Republican leaders to deal with the federal deficit.

Article © AHN – All Rights Reserved

View full post on All Stories

Friendly’s restaurants prepping for bankruptcy

Diane Alter – AHN News Reporter

Wilbraham, MA, United States (AHN) – The Friendly’s restaurant chain is preparing for a possible bankruptcy filing as early as next week, the Wall Street Journal reported Friday.

The Wilbraham, MA, company best known for its hamburgers and sundaes employs roughly 10,000 people and operates more than 500 restaurants.

Economic conditions have weighed heavily on the chain. Fewer consumers are spending money to dine out and rising commodities prices for staples such as corn, butter and coffee have drained the company of cash. Other restaurant chains have faced similar fates, such as Quiznos and Sbarro.

Friendly’s has more than $250 million in debt on its books. The company is in talks with Wells Fargo for $70 million in debtor-in-possession financing that would keep it above water during bankruptcy proceedings.

Friendly’s had humble beginnings. It began as a small ice cream shop opened by the Blake brothers during the Great Depression in Springfield, MA. It expanded along the East Cost and was sold to Hershey in 1979. Friendly’s changed hands again before eventually being taken private by Sun Capital Partners Inc. of Boca Raton on 2007.

Article © AHN – All Rights Reserved

View full post on All Stories

Moody’s cuts credit ratings of eight Greek banks

Vittorio Hernandez – AHN News

Athens, Greece (AHN) – Moody’s Investors Service downgraded the credit rating of eight Greek banks by two notches on Friday. The rating agency cited anticipated heavy losses because of the banks’ holding of Greek government bonds, the impact of a recession, weak liquidity and funding positions.

Moody’s reduced to Caa2 from B3 the ratings of:

  • the National Bank of Greece,
  • EFG Eurobank Ergasias,
  • Alpha Bank,
  • Piraeus Bank,
  • Agricultural Bank of Greece and
  • Attica Bank.

It cut to B3 from B1 the ratings of:

  • Emponki Bank of Greece and
  • General Bank of Greece.

The reduced ratings were accompanied by a negative ongoing outlook.

The rating agency also warned of substantial losses among private creditors holding Greek government bonds over the terms of the current debt exchange, particularly if unfavorable developments arise in the implementation of the $146.75 billion (€109 billion) second tranche of bailout funds from the European Central Bank and the International Monetary Fund.

Major Greek banks have said they will participate in a Greek government bond swap program that will cause large losses in the banks’ government bonds holdings, which Moody’s warned would place the banks’ capital levels at risk of material deduction.

The Greek government announced on Wednesday another round of austerity measures in response to pressure from European officials and IMF to hasten policy changes as conditions for the release of additional aid and prevent a default.

The initiatives, which includes large cuts in pensions and salaries, sparked massive public strikes, particularly in the transport sector, to protest the cuts.

Article © AHN – All Rights Reserved

View full post on All Stories