CITATIONS DU JOUR :

- "L'Europe à 27 est une hérésie."
- "A la longue, si rien ne se passe, si on continue à accumuler les déséquilibres, comme au début du XXe siècle, l'issue sera la même: la guerre."
Journaliste et économiste, Jean-Michel Quatrepoint vient de publier Mourir pour le yuan?
- "Notre cauchemar économique ne fait que commencer". John B. Judis, rédacteur en chef de la revue The New Republic

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- Les fonds américains fuient les banques européennes


Selon Fitch Ratings, ils ont réduit leur exposition aux établissements européens en retirant 27% de leurs placements ces trois derniers mois.
La crise de confiance du secteur bancaire européen ne risque pas de s'arranger. Alors que l'Europe tente de convaincre le monde de la solidité de ses établissements bancaires dans la crise actuelle, les grands fonds monétaires américains préfèrent quitter le navire. Selon une étude publiée vendredi par l'agence de notation Fitch Ratings, les dix plus grands fonds outre-Atlantique ont réduit massivement leur exposition aux banques européennes. Ils ont ainsi taillé leurs placements en dollar en titres bancaires européens de 8% au mois d'août, après une baisse de 9% en juillet. Depuis fin mai, leur exposition a été rabotée de 27%.
Aujourd'hui, les titres bancaires européens détenus par ces dix fonds américains représentent 676 milliards de dollars, soit 42,1% de leur portefeuille global. Ces placements pesaient encore 47,2% fin juillet. «La réduction de l'exposition aux principales banques européennes est largement compensée par la hausse des investissements dans des établissements financiers en Australie, au Canada, au Japon et en Scandinavie», explique Robert Grossman, un responsable de Fitch Ratings.

Certains pays d'Europe sont plus touchés que d'autres par la fuite des investissements américains.
Certains pays d'Europe sont plus touchés que d'autres. La France, par exemple, ne représente plus que 11,2% du portefeuille de ces grands fonds. Ces derniers ont réduit de 34% leur exposition aux banques françaises depuis fin mai, et de 19% sur le seul mois d'août. L'Allemagne (-36% depuis fin mai) et le Royaume-Uni (-22%) ont également perdu leurs faveurs. Voilà qui risque d'assombrir encore davantage l'horizon du secteur bancaire européen. Alors que les fonds monétaires («money market funds» ou MMF) sont considérés aux États-Unis comme des investissements très sécurisés, la fuite de ces placements n'est pas un bon signal pour les Européens, qui font tout pour désamorcer la tension que génère la crise de la dette dans le milieu bancaire.
Défiance des entreprises
Dans un entretien au Figaro cette semaine, Frédéric Oudéa, PDG de la Société générale et président de la Fédération bancaire française (FBF), a souligné la nécessité de «casser la spirale de la peur». «Les stress tests qui avaient été menés avant l'été ont démontré qu'un nombre restreint de petits établissements avait un besoin immédiat de capitaux supplémentaires. Ce n'est pas le cas de la majorité des banques européennes, ni des banques françaises en particulier», a-t-il rappelé.
Ces appels à la raison sonnent dans le vide. Les investisseurs ne sont pas les seuls à se méfier des banques européennes. Une nouvelle étape a d'ailleurs été franchie en France. Depuis le début de la semaine, des bruits ont couru sur la volonté de certains groupes, comme Siemens ou Meetic, de limiter leurs expositions aux financiers hexagonaux.






- Grèce, quand l'Allemagne oublie ses dettes


L'histoire devrait inciter Berlin à plus de générosité envers Athènes.
Grèce, quand l'Allemagne oublie ses dettes

6 avril 1941, la Wehrmacht envahit la Grèce. Hitler s'est lassé de voir que son allié Mussolini ne parvient pas à mettre au pas l'armée grecque, qui, depuis octobre 1940, lui résiste courageusement. Le Führer va lui faire payer cher ce combat désespéré. Commence en effet une occupation très dure qui va mettre la Grèce à genoux. Les historiens estiment qu'après la Pologne et l'URSS, la Grèce est le pays qui a le plus souffert de la barbarie allemande pendant la Seconde Guerre mondiale. Un chiffre : on évalue à 300 000 le nombre de personnes littéralement mortes de faim pendant cette période, du fait des privations liées à l'occupation nazie.
Après la Libération, l'Allemagne a dû accepter de compenser matériellement les souffrances et les pertes humaines que le Troisième Reich avait infligées aux populations occupées. Et après examen par une foultitude de commissions d'évaluation et des tergiversations qui devaient tenir compte de ce que l'Allemagne fédérale était devenue un allié précieux face au bloc soviétique, les réparations ont été définitivement fixées par un traité signé en 1953 à 41 milliards de dollars, payés par la seule Allemagne de l'Ouest à la Grèce.
Revanche
Or ces compensations ne tenaient pas compte d'une autre dette, facilement chiffrable puisqu'il s'agit d'un prêt forcé de 476 millions de reichsmarks que la Banque centrale de la Grèce occupée avait été contrainte de verser à Berlin, en 1941, au titre des contributions "à l'effort de guerre allemand". Un prêt à l'époque sans espoir de remboursement, dont l'Allemagne fédérale considère qu'il était compris dans les dommages de guerre dont elle s'est acquittée.
Seulement, quand on est, comme la Grèce, au bord de la faillite, tous les moyens sont bons. Et, comme croit le savoir Die Welt, certains à Athènes ont commencé à avancer que le prêt de 476 millions de reichsmarks fait sous la contrainte à l'Allemagne nazie ne pouvait être assimilé à un sinistre de guerre comme les autres. C'est, disent ceux qui exhument ainsi le passé, un emprunt dont la Grèce est en droit de demander le remboursement.
Or, selon les calculs des spécialistes, la somme libellée en reichsmarks correspond aujourd'hui à 14 milliards de dollars, environ 10 milliards d'euros. De plus, si on affecte ce montant d'un taux d'intérêt classique de 3 % sur 66 ans, on parvient à un total de 95 milliards de dollars, 68 milliards d'euros, soit un cinquième de la dette grecque. Certes, cela ne suffirait pas à renflouer le Trésor grec, mais cela améliorerait grandement la situation. Et cela constituerait surtout une jolie revanche d'Athènes sur un gouvernement allemand qui, depuis le début de la crise des dettes souveraines, est plus que réticent à apporter son aide au moins sérieux des pays du "club Med'", comme on le dit assez méchamment à Berlin.



- L’énorme dette cachée de l’Allemagne


"La vérité", titre le Handelsblatt qui coupe court à la présumée parcimonie de l'Etat allemand, des chiffres faramineux à l'appui. Officiellement, la dette allemande en 2011 est de 2 000 milliards d’euros. Mais ce n'est qu'une demi-vérité, car la majeur partie des dépenses prévues pour les retraités, les malades et les personnes dépendantes ne sont pas inclues dans le calcul. D'après des nouveaux chiffres, la véritable dette se chiffre en 5 000 milliards d'euros supplémentaires. L'Allemagne serait donc endettée à hauteur de 185 % de son produit intérieur brut et non pas 83 % comme officiellement annoncé. Par comparaison, la dette grecque devrait être de 186% du PIB en 2012, et la dette italienne est actuellement de 120%. Le seuil critique au-delà duquel la dette écrase la croissance est de 90%. Depuis son arrivée au pouvoir en 2005, Angela Merkel, "a créé autant de nouvelles dettes que tous les chanceliers des quatre dernières décennies réunis", remarque l'économiste en chef du quotidien économique. "Ces 7 000 milliards d'euros sont un chèque sans provision que nous avons signé et que nos enfants et petits enfant devront payer."




- «Continuons d'accumuler les déséquilibres, et ce sera la guerre»

Recueilli par DOMINIQUE ALBERTINI - Journaliste et économiste, Jean-Michel Quatrepoint vient de publierMourir pour le yuan? (chez François Bourin Editeur), une analyse de la stratégie de puissance de la Chine face au déclin consenti des puissances occidentales. Il explique les profonds déséquilibres, aggravés par la crise, qui se creusent au détriment de celles-ci.
La question du yuan est au menu des discussions du G20 à Washington. Quel est le problème avec la monnaie chinoise?
Le yuan est la monnaie de la seconde puissance mondiale, du premier pays en termes de détention de réserves de change. Or cette monnaie n'est pas convertible: la Chine exerce un contrôle des changes pour en contrôler strictement la valeur. Le yuan est considérablement sous-évalué. De plus, depuis trente ans, la stratégie de Pékin est d'indexer le yuan sur le dollar, pour que les évolutions de ces deux monnaies soient synchronisées.
Quels sont les avantages de cette stratégie monétaire?
Elle permet d'attirer les multinationales sur le sol chinois. Garder la monnaie sous-évaluée permet de produire moins cher. Les Chinois se souviennent qu'en 1985, Washington avait forcé les Japonais à réévaluer le yen, tordant le cou à l'industrie japonaise. Ils ne laisseront pas la même chose leur arriver.
Par ailleurs, indexer le yuan sur le dollar, c'est garantir aux multinationales qu'elles ne prennent pas de risques de change. En retour, la Chine demande à celles-ci de produire pour l'exportation, pas pour le marché local. C'est une stratégie géniale, un pacte gagnant-gagnant: les multinationales engrangent les bénéfices, et la Chine les excédents commerciaux. Aux dépens de l'industrie et des balances commerciales de l'Europe et des Etats-Unis, qui perdent des emplois et des capitaux.
Quel est l'intérêt pour la Chine d'accumuler ces excédents?
D'abord, le pays ne peut pas basculer brutalement d'un modèle mercantiliste, basé sur l'exportation, à un modèle de consommation intérieure. Ensuite, la Chine vieillit, comme l'Allemagne: dans 20 ou 30 ans, il faudra financer un grand nombre de retraites. D'où le besoin d'engranger des recettes à l'export.
Enfin, celles-ci permettent de racheter des actifs. Par exemple des bons du Trésor américain, c'est-à-dire la dette publique des Etats-Unis. Pékin se tourne aussi de plus en plus vers des actifs tangibles: telle ou telle entreprise qui dispose d'une technologie convoitée, telle autre, point d'entrée pour un marché particulier. On s'attend aussi à une importance croissante de la Chine dans la finance.
Quelles sont les conséquences de cette politique pour les économies occidentales?
Elle entraîne pour l'Europe et les Etats-Unis des déficits commerciaux considérables. Non seulement les emplois, mais aussi les capitaux sont délocalisés en Asie. Les multinationales n'investissent plus en Occident. Qu'est-ce qu'il reste? Des emplois publics, avec lesquels on espère masquer l'hémorragie d'emplois marchands. Tandis que l'on fait des cadeaux fiscaux aux grandes entreprises et aux super-riches.
Est-il impossible de faire pression sur la Chine pour qu'elle infléchisse sa politique monétaire?
L'erreur a été de l'admettre à l'OMC, en 2001, sans lui demander de renoncer au contrôle des changes. Entre 2005 et 2008, la Chine a procédé à une réévaluation par petites touches, 1% de temps de en temps, sous la pression internationale. Avec l'arrivée de la crise, ils se sont complètement réindéxés sur le dollar. Depuis quelques mois, ils ont repris leurs petites réévaluations. Mais pour mettre le yuan à son niveau réel, il faudrait le réévaluer de 30 ou 40%. D'un autre côté, on peut comprendre les Chinois, qui ne veulent pas alimenter l'inflation par une hausse importante.
Mais, en l'absence d'une forte demande intérieure, la Chine n'a-t-elle pas intérêt à la prospérité de ses principaux partenaires commerciaux?
Elle est obligée à un pilotage assez fin. Mais globalement, on est à un moment où la machine économique échappe à ses acteurs. Plus personne ne maîtrise plus rien, et Pékin ne peut pas racheter les dettes de tous les Etats européens. Les Chinois se sont déclarés prêts à aider, mais c'est surtout un effet d'annonce.
Peut-on espérer un front uni des Occidentaux sur le yuan lors du G20 de Cannes, début novembre?
Je crains que les Européens ne soient pas unis. Le principal partenaire de la Chine en Europe, c'est l'Allemagne, qui a adopté la même stratégie mercantiliste en réalisant ses excédents sur la zone euro. Le fait que l'euro soit trop fort par rapport au yuan, les Allemands s'en fichent: ils occupent la niche du haut de gamme. Le taux de l'euro, ça joue peu quand on vend des Mercedes. C'est plutôt nous, Français, qui sommes concernés par la question. Quant aux Américains, qui seraient les seuls à pouvoir faire pression sur la Chine, ils ne remettent pas en cause son adhésion à l'OMC, par attachement au libre-échange. Ils n'ont pas compris les problèmes que pose leur déficit commercial, alors que l'Amérique s'appauvrit.
Il ne faut donc pas trop compter, selon vous, sur les grands changements annoncés?
Non. Les Chinois veulent que leur monnaie devienne à terme la seconde devise mondiale, voire la première. Ils ont déjà suggéré aux autres puissances émergentes de ne plus utiliser le dollar pour leurs échanges entre elles, mais une monnaie commune, et pourquoi pas le yuan...
Que peut faire l'Europe face à cette nouvelle super-puissance chinoise?
L'Europe à 27 est une hérésie. La France doit se mettre à table avec l'Allemagne et discuter d'une nouvelle étape de la construction européenne. Peut-on continuer à vivre ensemble, avec les compromis que cela implique? Il faut alors construire une vraie puissance européenne, avec une vraie géostratégie. Les brésiliens ont créé des taxes à l'importation, obligent Apple à produire sur place, idem pour les voitures. L'Europe doit y venir aussi.
Pourquoi avoir titré votre livre «Mourir pour le yuan»?
A la longue, si rien ne se passe, si on continue à accumuler les déséquilibres, comme au début du XXe siècle, l'issue sera la même: la guerre.


- Europe hastens to build up debt crisis defenses - Commuters make their way in front of an Alpha bank branch in Athens

REUTERS-Yiorgos Karahalis - A commuter sits inside a bus during a 24-hour metro, tram and urban railway transport strike in Athens September 23, 2011. Greece's finance minister has told lawmakers he sees three scenarios to resolve the debt crisis, including one involving an orderly default with a 50 percent haircut for bondholders, two Greek newspapers reported on Friday. REUTERS-John Kolesidis
By Lesley Wroughton and Dina Kyriakidou
(Reuters) - European policymakers are quickening their preparations to cope with an escalation of the region's debt crisis as talk of a possible Greek default gained pace on Friday.
Finance chiefs from around the world have turned up the heat on Europe to do more to prevent Greece's debt woes from infecting other euro zone countries and the world economy.
Concern now appeared to be turning toward safeguarding the banking system more than rescuing Greece, as international lenders were increasingly losing patience with Athens consistently missing fiscal and reform targets.
British finance minister George Osborne said the euro zone needed to gain control of the situation by the time leaders of the Group of 20 economies meet in France in November.
"They have six weeks to resolve this crisis," he said on the sidelines of semiannual policy discussions in Washington.
World stock markets, which had plunged to a 14-month low on fears about the scale of the crisis, steadied after European Central Bank officials said they would use more firepower to help the banking system withstand financial strains.
Pressure is growing on European governments for a recapitalization of the region's banks to strengthen them in the event of a Greek default.
At the same time, European policy-makers seemed to be warming to the idea of giving more muscle to their bailout fund, which would be sorely tested if Athens defaulted.
Greek Finance Minister Evangelos Venizelos was quoted by two newspapers as saying an orderly default with a 50 percent haircut for bondholders was one way to resolve the heavily indebted euro zonenation's cash crunch.
Greece is in tense talks with the International Monetary Fund and European authorities, known as the troika, to secure a new 8 billion-euro installment of its rescue package to avoid bankruptcy in October.
In return for aid, Athens pledged austerity measures, but negotiators have expressed frustration at what they say is Greece's slow reform pace. The nation's finance minister is due to meet the head of the IMF on Sunday.
"The troika officials said they were going over again measures they had agreed to months before. They said they had a sense of deja vu," a source close to the talks said on condition of anonymity.
October's loan payment, however, is still widely expected to be made. The next installment is due in December.
ECB President Jean-Claude Trichet urged authorities to take decisive action, saying risks to the financial system had "increased considerably."
Lawrence Summers, a former U.S. treasury secretary, gave a somber assessment of the dangers facing the world economy, including a U.S. recovery that has neared a standstill.
"This is the 20th annual meeting (of the IMF and World Bank) I've been privileged to attend. There has not been a prior meeting at which matters have had more gravity and at which I have been more concerned about the future of the global economy," Summers told a discussion panel.
PUZZLE PIECES
As European policymakers looked to piece together a bolder crisis-fighting strategy, investors took some relief as three officials said the ECB could revive its one-year liquidity lines to shore up banks.
"I think it might be advisable to think about reintroducing this approach," ECB governing council member Ewald Nowotny said.
The IMF, which has been pressing aggressively for a recapitalization of Europe's banks, reckons the debt crisis has increased their risk exposure by 300 billion euros.
In a sign Europe was coming to terms with the idea of a recapitalization, France's top market regulator said 15 to 20 banks needed extra capital.
The growing talk of a Greek default met with stiff opposition from German Chancellor Angela Merkel. She told a meeting of her political party members that default was not an option because it might trigger a domino effect with other struggling economies. "The damage would be impossible to predict," Merkel warned.
Politicians in northern Europe, especially in Germany, have opposed dedicating more money to fight a crisis that they see as caused by the profligacy of other euro zone members. Now, leaders will have to navigate the tricky politics.
"It's not a question of ability for the euro zone," Bank of Canada Governor Mark Carney. "It is a question of political will."
ECB governing council member Klaas Knot told a Dutch daily a Greek default could no longer be ruled out, a warning echoed by the IMF's top official in Europe, Antonio Borges.
"If the Greeks do what they have to do there will be no default," Borges said. "But on the other hand if they hesitate, procrastinate, find it impossible ... then it is very hard to avoid."
G20 finance ministers and central bankers had pledged on Thursday to "take all necessary actions to preserve the stability of the banking system and financial markets as required," a statement that failed to placate investors.
The G20 communique said the 17-nation euro zone would implement actions to "maximize" the impact of the region's bailout fund by mid-October.
G20 participants did not say how the 440 billion-euro European Financial Stability Facility might be altered although French Finance Minister Francois Baroin used the word "leverage" in comments to reporters.
The United States has called on Europe to leverage up the EFSF to give it more firepower.
(Additional reporting by IMF reporting team in Washington, Sakari Suoninen in Frankfurt, Natsuko Waki and Ana Nicolai da Costa in London, Lefteris Papadimas and Ingrid Melander in Athens; Writing by William Schomberg, Glenn Somerville and Paul Taylor; Editing by Chizu Nomiyama andNeil Stempleman)




- Trichet: Europe at epicenter of global debt crisis


By Marc Jones (Reuters) - The euro zone is the epicenter of a much broader sovereign debt crisis, ECB President Jean-Claude Trichet warned on Friday.
Trichet said that while the euro zone was the focus of financial market fears about debt-strained countries, the problem was actually wider spread.
"We have in front of us a global crisis of sovereign risk and we (euro zone) are the epicenter of this global crisis," he said during a speech to the Bretton Woods committee.
He added that the current situation was also more precarious than when Lehman Brothers collapsed and sent the global economy into a tailspin in late 2008, as there was no longer the belief in markets that key countries would not default on their debts.




- World Economic Crisis: The world prays for an economic miracle

By Ben Chu, Economics Editor in Washington - After an incredibly volatile day on world markets, the head of the International Monetary Fund, Christine Lagarde, warned of a looming "collapse in global demand" which threatens to push economies around the world into a new recession.
Click HERE to download graphic: The Summer Meltdown: How The Stock Markets Fell (236.96kB)
"Dark clouds over Europe and huge uncertainty in the United States" mean that "the challenge could not be more urgent", she told politicians and leading economists in Washington, who are meeting there in an attempt to tackle the world's economic woes.
Calling for immediate action to support global growth and stabilise the international financial sector, Ms Lagarde said: "The actions I am calling for today are not for the coming years – they are for the coming months."
The stark warning followed the failure of the G20 group of leading economies to convince investors that they would avert a new global banking crisis. A communiqué from G20 finance ministers and central bank governors pledging to "take all necessary action to preserve the stability of banking systems and financial markets" failed to deliver a significant lift to investor sentiment. Stock markets in Europe and the US picked up slightly by the close of trading yesterday, but generally failed to recover the large losses experienced earlier in the week.
The Chancellor, George Osborne, who is in Washington for the IMF summit, attempted to ratchet up the pressure on his European counterparts, warning that they had six weeks to agree on radical measures to address the eurozone sovereign debt crisis before the next G20 meeting in November in Cannes. "There is now a quite clear deadline set which is the Cannes summit," he said. "The eurozone has six weeks to resolve this political crisis." The Chancellor claimed that European finance ministers are finally waking up to the fact that they must act faster to resolve the Continental debt crisis, saying that the "leading lights of the eurozone are aware of the fact that time [is] running out for them".
The G20 communiqué had sought to reassure financial markets that prompt action would be taken to ensure that all banks have sufficient capital buffers to absorb any economic shocks.
It said: "We will ensure that banks are adequately capitalised and have sufficient access to funding to deal with current risks."
But no new plan to inject capital into the Continent's fragile financial sector was announced. The IMF claimed this week that there is a potential €200bn-hole in the balance sheets of European banks as a consequence of strains in the European sovereign debt market.
And Ms Lagarde repeated her call for European leaders to act quickly to strengthen the balance sheets of their banks. A move by the credit rating agency Moody's to further downgrade eight Greek banks underlined the stresses in the Continent's financial sector.
The G20 communiqué also promised that the powers of the eurozone's emergency stabilisation fund, the EFSF, will be significantly boosted by the time of the Cannes meeting, enabling it to recapitalise banks and increase emergency lending to troubled states.
But that is dependent on national parliaments sanctioning an increase in the EFSF's powers. The German Bundestag will vote on the measures on 29 September. The German Chancellor, Angela Merkel, is facing problems convincing her Christian Democrat Party and her coalition partners, the Free Democrats, to back the legislation.
Despite instructing European leaders to take radical action in the face of the looming economic emergency, Mr Osborne refused to budge from his own radical deficit-reduction strategy. The Chancellor rejected claims he is contributing to the deficiency of global demand with his determination to wipe out the bulk of the UK's budget deficit by the end of this parliament. "This is a debt crisis. You can't separate debt and demand," he said. "They are intricately linked. Unless you deal with debt you can't deal with demand."
The Chancellor also stressed that, despite his opposition to the UK ever joining the single currency, it is in Britain's national interest for the eurozone to survive the present crisis: "I'm very clear that a break-up of the euro is bad for Britain ... It is in Britain's interest that the euro works, that it's stable."
Although Britain is not in the eurozone, the British banking sector is significantly exposed to turmoil in the currency bloc. A stress test of Europe's banks in July by the European Banking Authority showed that the Royal Bank of Scotland, Barclays and HSBC have extended loans amounting to €204bn to governments and companies in troubled eurozone nations.
If the single currency were to collapse, British banks would register large losses on those loans. Despite rising fears about the health of European banks, Mr Osborne yesterday insisted that British banks are perfectly safe: "UK banks are well capitalised and liquid."

- “Il n’y a plus qu’à prier”, disent-ils


Ce titre-là est caractéristique, et il n’a nul besoin de traduction : «The world prays for an economic miracle.» Il est de Ben Chu, le spécialiste économique de The Independent, ce 24 septembre 2011, Chu écrivant de Washington après le sommet du G20 (au niveau des ministres). L’introduction très symbolique de la notion de l'idée de “prière” est une bonne description de l’état des esprits et de la tension des psychologies.
Certes, le G20 n’a rien apporté, sinon les habituelles paroles lénifiantes et presque insupportables de pauvreté au regard de la puissance des événements. Il n’y a aucune raison de s’en trouver surpris, comme il est inutile de lancer les habituels anathèmes contre cette impuissance qui enveloppe comme un corset de fer ces réunions sans nombre, sans fin et sans effets… Le même journal, dans un autre texte de ce même 24 septembre 2011, observe à propos de la réunion du FMI qui enchaîne directement sur le G20 : «Let's just say that when Christine Lagarde, the IMF managing director, warned yesterday that this weekend's meetings probably wouldn't be able find solutions but would try to agree on a “common diagnosis”, she was being optimistic.»
…Effectivement, c’est à propos des déclarations quasiment churchilliennes de Christine Lagarde au G20 que Ben Chu commence son texte. (Lagarde, passée directement de l’optimisme “bling-bling” et de bon aloi électoral du gouvernement Sarkozy au rôle de grande prêtresse et Pythonisse de l’apocalypse financier et économique, du haut de la tribune du FMI désormais transformée en observatoire de la catastrophe, – tout cela, avec l’approbation de l’administration US qui ne perd pas une occasion de montrer la médiocrité confondante et la bassesse abyssale de ses conceptions politiques, en continuant à poursuivre une option partisane au milieu de cette danse sur le volcan déchaîné.)
«After an incredibly volatile day on world markets, the head of the International Monetary Fund, Christine Lagarde, warned of a looming “collapse in global demand” which threatens to push economies around the world into a new recession. “Dark clouds over Europe and huge uncertainty in the United States” mean that “the challenge could not be more urgent”, she told politicians and leading economists in Washington, who are meeting there in an attempt to tackle the world's economic woes.
»Calling for immediate action to support global growth and stabilise the international financial sector, Ms Lagarde said: “The actions I am calling for today are not for the coming years – they are for the coming months.” The stark warning followed the failure of the G20 group of leading economies to convince investors that they would avert a new global banking crisis. A communiqué from G20 finance ministers and central bank governors pledging to “take all necessary action to preserve the stability of banking systems and financial markets” failed to deliver a significant lift to investor sentiment. Stock markets in Europe and the US picked up slightly by the close of trading yesterday, but generally failed to recover the large losses experienced earlier in the week. […]
»And Ms Lagarde repeated her call for European leaders to act quickly…»
“Agir vite…” ? Mais ils ne font que cela, depuis trois ans, allant de décision unanime en décision unanime, de désaccord complet en désaccord complet, de cri d’optimisme triomphal en cri d’optimisme triomphal, de soupir d’accablement catastrophé en soupir d’accablement catastrophé… Ils suivent les marchés avec un zèle sans fin, persuadés que là se trouve la clef de tout, et la solution à l’incompréhensible équation qui se tord devant eux : «Claiming that the G20 ministers and central bankers were “taking strong actions to maintain financial stability, restore confidence and support growth,” the statement asserted, “We commit to take all actions to preserve the stability of banking systems and financial markets as required”» (Selon WSWS.org du 24 septembre 2011, qui nous parle de leur perplexité et de leur peur devant une “crise qui s’avère hors de contrôle et qui nous emporte vers une dépression dans toute sa puissance”.) Arriveront-ils à persuader “le marché” avec ses bourses incontrôlables ? Qu’importe, rétorque The Independent, puisque «[t]he stock market is a poor guide to the health of the world economy at the best of times. Lots of other markets were still in freefall – many commodities plunged and credit market indicators are flashing an ever more scarlet shade.»
Ils sont à court de décisions, à court de commentaires, à court de mots, si bien, effectivement, qu’“il n’y a plus qu’à prier”. Ainsi en revient-on toujours à la même conclusion lorsque la crise reparaît. En effet, il ne s’agit bien entendu pas d’une crise “classique”, comme au bon vieux temps, de celle qui monte en puissance et en tension jusqu’à son paroxysme, avec l’attente qu’il y aura ensuite la phase de la réduction de la tension, une fois accompli ce paroxysme ; il s’agit de cette nouvelle sorte de crise, que nous définissions (le 19 août 2011) comme “la crise est en crise”, c’est-à-dire une crise qui s’installe en elle-même pour durer et durer, qui se forme structurellement, qui prend ses aises dans son paroxysme continué comme s’il était sans fin, qui se signale à notre attention de terme en terme, qui semble disparaître, qui reparaît, etc. La phase actuelle de la crise a débuté le 15 septembre 2008 et n’a plus cessé depuis, prenant diverses formes et provoquant divers effets, tous évidemment de plus en plus marqués par la dégradation de la situation.
Aussi observons-nous et confirmons-nous que le plus important est ailleurs, dans la dévastation psychologique que ce régime de crise au paroxysme sans fin provoque chez les dirigeants divers du Système. Nous le signalions également dans le texte référencé, à partir du constat d’un officiel de la Banque d’Angleterre sur les “plaies psychologiques” (“psychological scars”) que causent les diverses phases, qui n’arrivent pas à cicatriser, qui, au contraire, additionnent leurs propres effets, – et c’est bien de ce point de vue qu’il faut parler de “dévastation psychologique”.
Une fois encore, poursuivant notre logique, nous ne prêtons guère d’intérêt aux divers problèmes “techniques” posés, aux diverses solutions proposées, d’ailleurs tout cela plongé de plus en plus profondément dans l’insoluble contradiction du cercle vicieux. Il y a une recherche parallèle et désormais presque hystérique à la fois d’austérité et de croissance, à la fois de l’eau et du feu, qui conduit évidemment à la schizophrénie et nous ramène au domaine psychologique. Par conséquent, on retiendra le ton de la Pythonisse catastrophique (Lagarde) autant que le “il n’y a plus qu’à prier” (en attendant un miracle) de Ben Chu ; ces positions et ces remarques, qui reflètent le climat psychologique, nous confirment effectivement l’évolution des psychologies vers la prise de conscience terrorisée du caractère inéluctablement autodestructeur de cette crise, comme partie de la crise générale elle-même autodestructrice. Les diverses directions du Système sont en train de s’imprégner, via leurs psychologies affolées et épuisées, de cette terrible vérité que le Système ne joue plus leur jeu, qu’il est entraîné vers la trajectoire finale de sa propre chute. Peu importe que tous ces gens ne le réalisent pas, et le disent encore moins, mais il faut être persuadé que ces terribles vérités sont en train de forcer leurs psychologies et de s’installer dans les esprits.
Désormais, le problème général devant lequel ils se trouvent s’élargit de plus en plus, et change de substance, au travers des questions qui se profilent derrière l’exclamation implicite qui sous-tend le titre de Ben Chu. “Il n’y a plus qu’à prier”, certes, – mais qui faut-il prier ? Et quelle prière faut-il adresser à cette hypothétique entité vers laquelle on se tournerait ?



- Is the Chinese Economy in Trouble Too?


As the American economy appears to teeter on the edge of another recession, Europe struggles with a financial crisis and emerging markets like Brazil and India show new weaknesses, China may appear to be in better shape than most countries, economists say. But “better” is relative.
AFP | Getty Images
A labour works in a textile factory in Yiwu, east China's Zhejiang province
On the surface, economists at the International Monetary Fund and most banks are still estimating China’s growth rate to be over 9 percent this year. China continues to run very large trade surpluses. New construction starts have soared with a government campaign to provide more affordable housing.
And yet, the country’s huge manufacturing sector is starting to slow and orders are weakening, especially for exports. The real estate bubble is starting to spring leaks, even as inflation remains stubbornly high for consumers — despite a series of interest rate increases and ever-tighter limits on bank lending.
Because China’s mighty growth engine has been one of the few drivers of the global economy since the financial crisis of 2008, signs of deceleration could add to worries about the global outlook.
A survey of Chinese purchasing managers, just completed by HSBC and Markit Economics, shows a third consecutive month of contraction in the manufacturing sector. The release of the survey results on Thursday contributed to a global slide in stock markets that day.
Meanwhile, huge loans that Chinese banks have made to state-owned enterprises and local governments over the last three years could cause trouble if the economy does slow.
What’s more, there are further signs of trade hostilities from Washington, where the impulse is to blame China’s cheap exports, at least partly, for America’s continued high unemployment.
On Thursday, a bipartisan group of senators announced that they would pursue legislation requiring the Obama administration to confront China more directly on currency policy. They want the White House to push harder for China to allow its currency, the renminbi, to appreciate.
If China does allow its currency to rise more quickly and if its trade surplus narrows, that could help economies elsewhere. But too much of a slowdown in China could simply add to the world’s financial gloom.
Chinese exporters are particularly worried
Nicole Huang, the sales manager at the Dongguan Lianyi Sport Goods Company, a maker of beer coolers, diving suits and other products in the industrial hub city of Dongguan, said the number of orders had dropped 5 percent so far this year, and the average size of each order had also begun to shrink.
And instead of the labor shortages that plagued many manufacturers last year as workers sought better jobs elsewhere, more people now seem willing to accept assembly-line tedium. Short term, that could help exporters. But it could be an early sign of looming unemployment problems.
“At least it is easier now for us to hire workers who come into our factory looking for work, after seeing our job notices posted outside,” Mr. Huang said. “Before, no one would respond to these notices.”
The sentiments of investors and economists inside and outside China have taken a bearish turn in recent weeks. As global stock markets have tumbled, the Shanghai A-share stock market has fallen 14.7 percent since July 15. That includes a further decline of 0.4 percent on Friday.
The most worried economists are those who follow China’s manic monetary policy. The central bank oversaw a huge stimulus effort in 2009 and 2010 in response to the global economic slowdown, rapidly expanding its issuance of money and then encouraging banks to lend and relend it. Broadly measured, the money supply surged 53 percent in two years.
The extra cash has sent inflation at the consumer level surging to more than 6 percent even by official measures, which tend to understate true inflation for methodological reasons.
With inflation now running at more than twice the regulated interest rate paid by banks for deposits, millions of Chinese have been betting their savings on real estate. That frenzy had been sending property prices through the roof, at least until the last couple of months.
But this year, to fight inflation, the Chinese financial authorities have veered in the other direction, setting strict administrative quotas on new loans. And they have ordered the mostly state-owned banks to park more than a fifth of their assets at the central bank, which further limits the banks’ ability to lend — and businesses’ ability to borrow.
Orchid Chen, the sales director of the Fujian Yuandong Electric Motor Group, which makes motors in Fu’an in southeastern China’s Fujian Province, said that banks were strictly following Beijing’s instructions.
“The smaller enterprises have found it difficult to secure any type of lending from banks,” she said.
“We are a good-sized company and still have support from the banks, though our loan rates have been adjusted upward two to three times this year already.”
Diana Choyleva, a Hong Kong-based economist for Lombard Street Research, predicted that the combination of tighter monetary policy with a likely slowdown in foreign demand for China’s exports would result in the Chinese economy’s growing at an annualized rate of only 5 percent in the second half of this year and the first half of next year.
“Just as the authorities are managing to hammer down demand growth, the rest of the world is not looking healthy, so there’s going to be an export shock,” she said.





- Faire preuve de réalisme


Par Pascal Roussel – On connait le vieil adage : « ne jamais croire en quelque chose aussi longtemps qu’elle n’est pas niée ». Actuellement le monde politique ne cesse de nier un éventuel défaut de la Grèce, un éclatement de la zone euro, une sous-capitalisation bancaire ou même la faillite d’une grande banque. Alors est-ce justement le moment d’y croire ?
Les « spécialistes » passent leur temps à nous rassurer : nous risquons un simple ralentissement de croissance sans plus. Pourtant, l’histoire récente a montré que lorsque l’on compare les prévisions de croissance effectuées par les institutions publiques souveraines, internationales ou européennes, par rapport à la croissance réellement observée après, on constate que ces prévisions ont toujours été trop optimistes car basées sur des modèles incapables de percevoir le caractère unique et historique de la crise que nous traversons.
La Banque des Règlements Internationaux, mieux connue sous le nom de banque centrale des banques centrales située au sommet de la pyramide, vient juste de publier un document dans lequel on peut lire (traduction libre) « les problèmes de dettes que les économies avancées doivent affronter sont encore pire que nous le pensions »… « Actuellement les dettes ont atteint des niveaux supérieurs à tout ce que nous avons pu observer sauf en temps de guerre. Les ratios de dettes publiques sont actuellement sur une voie explosive dans bon nombres de pays. Ces pays vont devoir mettre en place des changements politiques drastiques. Une simple stabilisation risque de ne pas être suffisante ».
Ceux qui étudient les dessous de l’histoire de la finance savent que c’est un avertissement qu’il ne faut pas prendre à la légère !
Il est essentiel de bien comprendre que nous allons vivre des événements financiers exceptionnels, car jamais dans toute l’histoire de l’humanité on a utilisé la dette de quelqu’un comme moyen de paiement c.à.d. comme moyen d’échange. Depuis le 15 août 1971, la monnaie est créée à partir de dettes publiques et privées sans le moindre lien avec l’or et reposant uniquement sur la promesse des autorités publiques de ne pas faire tourner la planche à billets. Promesse non tenue.
Comme nous subissons cette crise au quotidien depuis plusieurs années, il est certainement utile de prendre de la hauteur pour rappeler brièvement comment nous en sommes arrivés là :
- Sous le règne d’Alan Greenspan, toutes les lois limitant la capacité des banques commerciales à mener des opérations autres que les simples opérations de prêts ont progressivement été abolies. De même pour toutes les lois interdisant de spéculer sur la nourriture.
- Gonflement d’une bulle internet en 2000.
- Explosion de cette bulle et attentat en 2001.
- Introduction massive d’instruments financiers nouveaux basés sur la titrisation.
- Développement exponentiel de l’usage des produits dérivés.
- Déclenchement de l’effondrement, en 2007, par incorporation de prêts subprime avec d’autres de meilleures qualités et par titrisation du mélange entraînant une contamination mondiale par propagation de l’ensemble des produits financiers liés au marché immobilier.
- Perte de confiance dans le système bancaire.
- Intervention massive des Etats pour sauver le système bancaire.
- Transfert de la perte de confiance dans le système bancaire vers une perte de confiance dans les Etats eux-mêmes.
Nous en sommes à ce stade. L’étape prochaine que le système bancaire craint tout particulièrement est bien entendu le défaut de paiement d’un de ces Etats.
Dans un monde entièrement bâti sur les dettes, il est logique que les banques soient au cœur de la crise.
Une banque fonctionne de manière schématique en empruntant à court terme auprès d’autres institutions financières ainsi qu’auprès de ses clients (en puisant dans leurs comptes courants et comptes d’épargne) et en prêtant à plus long terme cet argent. Le risque principal vient de ce que l’on appelle la gestion actif-passif qui vise à garantir à tout moment une adéquation entre les différences de maturités qui existe pour les emprunts et les prêts. Ce que craint essentiellement une grande banque, c’est de perdre la confiance des institutions qui lui prêtent de l’argent à très court terme. Cette perte de confiance conduisant à une spirale infernale :
Dans un premier temps, quelques contreparties inquiètes refusent de renouveler les prêts très court terme. Ce refus induit un stress sur la trésorerie de la banque, ce qui renforce l’inquiétude des autres institutions prêteuses, ainsi que des retraits de dépôts. Ceci induit alors un effet négatif sur le cours de bourse de cette banque et sur son ratio capital propre/ niveau d’endettement. Cela renforce encore davantage le refus de renouveler les prêts court terme. Résultat, les agences de notation dégradent la note de crédit de la banque. Tout ceci déclenche des clauses contractuelles entre les prêteurs et la banque qui l’obligent à leur livrer brutalement des gages sous forme de titres financiers pour continuer à recevoir des prêts court terme dont sa survie dépend. Ce choc continue à affaiblir la trésorerie de la banque. On voit ainsi comment une spirale sans fin est amorcée. Finalement, les dépositaires individuels et les derniers prêteurs institutionnels court terme réagissent alors ensemble selon le principe « celui qui panique le premier a le plus de chance de récupérer son argent ». C’est exactement comme cela que Bear Stearns et Lehman Brothers ont disparu. Toute ressemblance avec la situation actuelle de certaines banques n’est peut-être pas une coïncidence.
On entend souvent que telle banque n’est pas aussi exposée à tel pays et qu’il n’y a rien à craindre. Mais il faut savoir qu’une banque garde ses instruments financiers dans deux types de portefeuille: un portefeuille de négociation et un portefeuille d’investissement (en général nettement plus important). Les titres contenu dans un portefeuille d’investissement ne sont pas destiné à être revendu, mais à être gardé jusqu’à leur maturité et, de ce fait, il n’y a aucune obligation pour la banque d’acter une perte si la valeur de marché de ces titres chute. C’est par exemple dans ce genre de portefeuille que les banques gardent les fameux actifs toxiques ou des titres souverains que plus personne ne veut acheter et dont la valeur est calculée par des modèles mathématiques. Donc, pour préciser, même si la valeur de marché des titres contenus dans ce portefeuille d’investissement devait être réduite de moitié, cela n’aurait pas d’impact sur les fonds propres de la banque.Mais s’il y a un véritable défaut d’un Etat, la situation est toute différente car alors cela veut dire que même en gardant les titres jusqu’à leur maturité la banque ne récupérera pas le montant prêté. Ainsi, en cas de défaut, la moins value des titres doit être enregistrée dans tous les différents types de portefeuilles et la perte pour la banque devient nettement plus importante. C’est cet aspect qui est rarement mis en évidence dans les publications officielles des banques; elles peuvent déjà difficilement digérer des chutes de prix d’obligations souveraines, mais encore bien plus difficilement un défaut de paiement d’un Etat qu’elles redoutent comme la peste.
En Europe, le système bancaire d’un pays est généralement fortement exposé aux dettes bancaires et publiques des autres pays. Cette interdépendance rend le système vulnérable à un effet de contagion semblable à la chute de dominos. Ainsi la chute d’un petit domino peut entraîner en bout de chaine la chute d’un gros domino. Il faut en effet bien comprendre que les banques sont par essence des institutions qui utilisent d’importants effets de levier.Traditionnellement, pour chaque euro de fonds propres, elles empruntent de 24 à 36 euros. Il en résulte qu’avec un ratio moyen de 30, il suffit de 3,5% de pertes sur le bilan d’une banque pour annihiler ses fonds propres.



- Le plan américain se fait jour…


Les banques françaises sont attaquées depuis plusieurs jours sur les marchés, certains investisseurs estimant qu’elles sont fragiles face à la crise de la dette souveraine et qu’elles devraient être recapitalisées. Commentaire du directeur général du fonds obligataire Pimco, Mohamed El-Erian, sur le site du Financial Times : « Il y a tous les signes d’une panique des investisseurs institutionnels envers les banques françaises ». « Si cela dure, les banques n’auront d’autre choix » que de rétablir leurs équilibres financiers « d’une manière drastique et désordonnée », juge M. El-Erian, ajoutant que les particuliers pourraient alors être tentés de suivre les investisseurs institutionnels. « L’Europe serait alors précipitée dans une crise bancaire ouverte (…) provoquant de manière certaine une autre récession », selon lui.
Et si l’épisode suivant l’attaque des banques françaises par les « amis » du président Sarkozy était la dégradation de la note de la dette française ? Les maçons de 1789 pourraient alors espérer une nouvelle révolution en 2012 pour imposer un autre système, totalitaire, sans pitié, comme on l’est déjà pour le peuple grec et combien d’autres malheureux dans le monde? Et si cela commençait par la France, en seraient-ils satisfaits? On comprend les confidences qui nous sont faites de vouloir quitter Paris avant les prochaines élections. Même un proche d’une famille oligarchique nous confiait, il y a 36 heures, qu’il n’avait plus aucune confiance dans la Suisse. « Elle se plantera comme les autres ». Les pauvres riches… ils ne savent comment planquer leur fortune. En l’espèce… quelques millions d’euros… bagatelle.
En attendant, plusieurs chefs d’entreprise nous font part de leur désarroi: les banques de détail se sont jetées dans la spéculation et sont maintenant étranglées. Elle ferment le robinet du crédit. Un banquier nous confiait récemment qu’il était certain que tout cela allait se terminer par une banqueroute. « Nous allons accorder de moins en moins de crédit à des entreprises qui sont le moteur de notre économie. Les emplois vont en souffrir et combien de PME PMI vont devoir fermer à cause de cette politique suicidaire couverte par les politiciens? »





- Les marchés européens affolés par le tableau noir dressé par la Fed

Les Bourses européennes ont réagi très négativement jeudi après l'avertissement lancé par la Réserve fédérale américaine sur les perspectives de l'économie américaine. Paris chute ainsi de près de 5%, et Milan de plus de 4%.
Par Dépêche (texte)
AFP - Les déclarations pessimistes sur la croissance mondiale de la Réserve fédérale américaine mercredi soir faisaient sévèrement chuter les Bourses européennes qui creusaient leurs pertes jeudi à la mi-journée, les valeurs bancaires touchant une nouvelle fois le fond.
Après une ouverture déjà en nette baisse, les Bourses européennes accentuaient leurs reculs vers 09H30 GMT, approchant ou dépassant la barre des 4% de pertes. La Bourse de Paris cédait ainsi 4,52%, Francfort 4,14%, Londres 4,19%, Milan 3,47% et Madrid 4,36%.
L'euro était également particulièrement affecté. Il accélérait sa chute jeudi, retombant sous 1,35 dollar, à son plus bas niveau depuis sept mois face au billet vert, et depuis dix ans face au yen, dans un marché extrêmement nerveux.
La modestie des mesures de soutien annoncées et la vision pessimiste de l'avenir de l'économie mondiale exprimée par la Fed avait déjà fait reculer les Bourses européennes mercredi soir, tout comme Wall Street.
La banque centrale a jugé que la reprise économique américaine était "lente" et menacée par des "risques importants". Elle a décidé, pour relancer la machine, de vendre d'ici fin juin 2012 pour 400 milliards de dollars de bons du Trésor et d'en racheter pour un montant identique avec une maturité plus longue.
Les mesures prises par la Fed ne font pas oublier aux marchés que "la crise de la zone euro reste à un niveau élevé", a noté Padhraic Garvey, d'ING à Francfort. "La Fed a renoncé à des mesures plus fortes", qui auraient rassuré les marchés", a noté de son côté la banque Berenberg.
Les Bourses asiatiques ont également accusé le coup jeudi. Tokyo a perdu 2,07% en clôture, Séoul 2,90% et Shanghai 2,78%. Hong Kong a plongé de 4,85%, à 17.911,95 points, son plus bas depuis juillet 2009, tandis que Sydney a reculé de 2,63% à 3.964,9 points, touchant là aussi son plus bas depuis plus de deux ans.
Toujours en première ligne, les valeurs bancaires chutaient fortement, leur exposition à la crise de la dette en zone euro et la dégradation par Moody's de la note attribuée aux banques américaines Bank of America et Wells Fargo.
L'évolution de la situation en Grèce restait également une source d'inquiétude pour les marchés jeudi. Le gouvernement grec s'est résigné mercredi soir à adopter des mesures d'austérité supplémentaires pour 2011 et 2012, sous pression de ses créanciers, l'UE et le Fonds monétaire international (FMI). Mais ces nouvelles mesures ont déclenché une nouvelle vague de grogne social qui s'est traduite par un appel à une nouvelle grève générale le 19 octobre.




- Crise grecque, etc. - CDS : pire que la dette, le produit financier qui pourrait provoquer la faillite des banques françaises...

François Fillon a taxé "d'irresponsables" mardi les propos de DSK qui avait assuré au 20h de TF1, qu'il fallait "prendre sa perte" de la dette grecque. Et si la restructuration de cette dette déclenchait un risque majeur "caché" pour les banques françaises ?

Comment en effet comprendre l’obstination des autorités françaises à refuser toute restructuration de la dette publique grecque ?


Une lourde interrogation pèse sur le système bancaire européen, et plus spécialement français. Comment en effet comprendre l’obstination des autorités françaises à refuser toute restructuration de la dette publique grecque ? Le ministre allemand de l’Économie, Philipp Rösler, l’évoque ouvertement, son collègue des finances, Wolfgang Schäuble, de façon plus elliptique, mais François Fillon et François Baroin ne veulent pas en entendre parler. Dominique Strauss-Kahn la considère comme inéluctable (il faut « prendre ses pertes ») lors de son passage au 20h de TF1, le Premier ministre juge ces propos « irresponsables ». Pourquoi cette polarisation ?
L’engagement total des banques françaises s’élève à une quarantaine ou une cinquantaine de milliards d’euros, suivant les estimations. Donc si la Grèce restructurait sa dette à hauteur de 50%, la perte de 20 ou 30 milliards serait absorbable par les banques, à tout le moins avec une aide de l’État, qui au passage lui coûterait moins cher que les multiples plans d’aide à ce pays à la dérive.
La bombe des CDS, produits dérivés dangereux
Mais un élément de l’équation reste dans l’ombre : le montant des CDS, et surtout qui les a vendus. Un CDS (Credit Default Swap) est un produit dérivé qui permet de se protéger contre un risque de crédit, d’une grande entreprise ou d’un État. Si vous possédez des emprunts grecs, vous pouvez acheter des CDS auprès d’une banque qui propose ce produit. Vous lui versez à échéances régulières une prime (d’autant plus élevée que le risque de défaut est grand), et si la Grèce fait effectivement défaut sur tout ou partie de sa dette, la banque compense la perte.
Vu comme cela, ça à l’air rassurant, mais il y a deux éléments qui rendent ce produit extrêmement dangereux :
Vous pouvez acheter des CDS sur la Grèce… même si vous ne possédez pas d’emprunts grecs ! Simplement pour jouer, pour spéculer, et toucher le jackpot en cas de faillite du pays. C’est comme si vous pouviez acheter une assurance incendie sur la maison de votre voisin…
Ce produit n’est pas négocié sur un marché organisé et surveillé par les régulateurs, comme la bourse, mais « de gré à gré » c'est-à-dire dans une opacité totale. Et en plus il ne figure pas au bilan des banques, mais dans le « hors bilan », c'est-à-dire que les banques ne communiquent pas dessus et ne publient aucun chiffre.

Ce produit diabolique a été inventé dans les années 1990 par Blythe Masters de la banque JP Morgan (on lira sa très intéressante biographie écrite par Pierre Jovanovic), et connaît un succès foudroyant avec des volumes mondiaux qui dépassent les 50 000 milliards de dollars ! (pour vous donner un ordre d'idée, la dette publique des USA est de 14 500 milliards de dollars).
Si une société vend trop de CDS sans avoir les fonds propres suffisants, elle se met en danger de mort : c’est ainsi que l'importante société d'assurance AIG a fait faillite en septembre 2008, et a du être renflouée de 100 milliards de dollars par Washington, après avoir vendu quantité de CDS sur Lehman Brothers, convaincue que l’une des principales banques d’affaires américaines ne pouvait pas faire faillite…
Les banques françaises touchées par la crise grecque via les CDS ?
Revenons à la France : déjà lors de la négociation du plan d’aide à la Grèce signé le 21 juillet, il fallait éviter tout « événement de crédit » (restructuration de la dette) susceptible de déclencher les CDS. Depuis la situation de la zone euro a encore empiré. Alorssoyons clairs : oui ou non les banques françaises ont-elles vendue des CDS sur la Grèce au point qu’un défaut total ou partiel de ce pays les mettrait en situation de faillite ? Voilà qui expliquerait l’obstination du gouvernement ! Le fait que la BNP, la Société Générale, le Crédit Agricole soient autant massacrés en bourse signifie-t-il que les investisseurs savent ou se doutent que c’est le cas ?
Il devient urgent de faire la lumière sur les engagements en CDS des banques françaises et européennes, et de rendre public cette information. Sinon les rumeurs continueront leur travail se sape, jusqu’à une faillite qui prendra tout le monde de court.



- [Doom! -
Our economic nightmare is just beginning.->http://www.tnr.com/print/article/economy/magazine/94963/economic-doom]

John B. Judis - Mitt Romney has shed the dark blue suit, white shirt, and pale blue tie of his 2008 campaign for an open-neck tattersall shirt with its sleeves rolled up. His sideburns are graying, and his eyes are lined, but he still sports a boyish grin and radiates the can-do enthusiasm of a man who is promising to turn the country around the way he once turned around the Salt Lake City Winter Olympics. This August morning, in the wake of the battle over raising the debt ceiling and Standard & Poor’s decision to downgrade America’s credit rating, he has come to Concord, New Hampshire, to speak to the local Chamber of Commerce. Beforehand, he agreed to answer a few questions from reporters.
In an opening statement, Romney blamed Standard & Poor’s decision on President Obama. The president’s spokespeople, he said, “would substitute Harry Truman’s ‘The buck stops here’ with a new motto: ‘The buck stops somewhere else.’ The truth is the buck stops at the president’s desk, and he needs to reassert the leadership necessary to restore America’s financial foundation.” To achieve such a foundation, Romney endorsed the congressional Republican plan, dubbed “cut, cap, and balance,” which would slash $111 billion from next year’s budget, reduce federal spending as a percentage of GDP from 22.5 to 19.7 percent in six years, and adopt a balanced budget amendment to the Constitution. The plan represents an attempt to achieve private-sector prosperity through public-sector austerity.
“Mr. Romney,” I said, after he had fielded several other questions, “I want to ask you something about history. You know, when Herbert Hoover had to face a financial crisis and then unemployment, his strategy was to balance the budget and cut spending, and that made things worse. When Roosevelt came in, unemployment was twenty-five and went to fourteen percent by 1937. With deficits. Aren’t you repeating the Hoover mistake?” Romney’s grin turned quizzical. “Do you really think so?” he asked me. “I do think so, but you go ahead,” I replied.
“Let’s go back to the Hoover days,” Romney began. “The issue in the Hoover years was what was happening in the budget that year. This year, we are spending $1.6 trillion more than we take in, and that would have made anyone in either party blush if they saw numbers like that. And the issue today is not just this year’s deficit, it’s deficits as far as the eyes can see. ... America has to rein in the excessive spending not just this year, but over the long period of time.”
I didn’t think it would be proper to turn Romney’s press conference into a debate about history, so I let his answer stand. But he seemed to be suggesting that the premise of my question was flawed because deficits are much larger today and will probably continue unabated. And they are larger—but that is because our GDP and government are also larger. Meanwhile, if our deficits stretch “as far as the eyes can see,” so did the deficits in Hoover’s day, which continued unabated for 16 years. Romney was insisting that there was nothing to be learned from Hoover’s response to the Great Depression. But, in fact, what happened in the United States and Europe in the ’30s is an excellent—perhaps, the best—guide to what is happening to us now.
Yet it’s not just Romney and the other Republican presidential candidates who seem oblivious to the lessons of the ’30s. From David Cameron to Angela Merkel to Japan’s new Prime Minister Yoshihiko Noda, many of the world’s leaders are convinced that austerity is the way to fix our broken economy. President Obama—at least judging by his recent jobs speech to Congress—seems to understand that this approach is leading to economic disaster; but he may have waited too long to begin making this case to the American people, and the odds that he can actually get any kind of massive spending bill through Congress, now or even after 2012, remain low.
During the next year of campaigning, we are going to hear lots of uplifting slogans about America’s can-do spirit and the bright prospects for our national future. That is the way politicians talk, and there is nothing wrong with that. But such optimistic rhetoric should not fool anyone about the underlying reality: Unless there is a fundamental—and difficult-to-imagine—change in the way our politics interacts with our economy, the United States and much of the world are headed for a very grim future.
TODAY’S RECESSION does not merely resemble the Great Depression; it is, to a real extent, a recurrence of it. It has the same unique causes and the same initial trajectory. Both downturns were triggered by a financial crisis coming on top of, and then deepening, a slowdown in industrial production and employment that had begun earlier and that was caused in part by rapid technological innovation. The 1920s saw the spread of electrification in industry; the 1990s saw the triumph of computerization in manufacturing and services. The recessions in 1926 and 2001 were both followed by “jobless recoveries.”
In each case, the financial crisis generated an overhang of consumer and business debt that—along with growing unemployment and underemployment, and the failure of real wages to rise—reduced effective demand to the point where the economy, without extensive government intervention, spun into a downward spiral of joblessness. The accumulation of debt also undermined the use of monetary policy to revive the economy. Even zero-percent interest rates could not induce private investment.
Finally, in contrast to the usual post-World War II recession, our current downturn, like the Great Depression, is global in character. Financial disturbances—aggravated by an unstable international monetary system—have spread globally. During the typical recession, a country suffering a downturn might hope to revive itself by cutting its spending. That might temporarily increase unemployment, but it would also depress wages and prices, simultaneously cutting the demand for imports and making a country’s exports more competitive against those of its rivals. But, when the recession is global, you get what John Maynard Keynes called the “paradox of thrift” writ large: As all nations cut their spending and attempt to devalue their currencies (which makes their exports cheaper), global demand shrinks still more, and the recession deepens.
Politicians today might not want to remember, but, in the first phase of the Great Depression, the major economies, oblivious to the paradox of thrift, took steps that made things much worse. In the United States, Hoover, who was a Republican progressive in the tradition of William Howard Taft rather than Calvin Coolidge, responded initially to the stock market crash and the drop in employment by proposing a tax cut and a modest public works program. He also tried to bring industry together to agree to invest and to maintain wages and prices. But, when firms continued to cut back, unemployment continued to rise, and tax revenues dropped—creating a budget deficit—Hoover and the Republicans turned to cutting government spending and raising taxes on the assumption that a government, like a business, should not respond to hard times by going further into debt. In a news conference in December 1930, Hoover declared, “Prosperity cannot be restored by raids upon the Public Treasury.” In fiscal year 1933 (which began in June 1932), federal spending actually decreased. By March 1933, when Franklin Roosevelt took office, the unemployment rate had climbed to 24.9 percent from 3.2 percent in 1929.
In Great Britain, the economy had begun to decline after 1925, when the Tory government, rejecting Keynes’s advice, decided to go back on the original pre-World War I gold standard. By raising the price of the pound in dollars or francs, the Tories priced British exports out of the world market. In May 1929, the Labour Party ousted the Conservative Party, whom voters blamed for the downturn. But Labour Prime Minister Ramsay MacDonald pursued many of the same policies as the conservatives. MacDonald was a socialist and blamed a “breakdown” in world capitalism for Britain’s ills, but he thought that as the head of capitalist Britain, he had to adhere to the gold standard and free trade, while cutting the budget.
Keynes’s Liberal Party, led by former Prime Minister Lloyd George, advocated massive public works, but Labour leaders branded the Liberal proposals “madcap finance.” They rejected any idea of a third way between laissez-faire capitalism and socialism. As unemployment soared in Britain, MacDonald proposed raising taxes and cutting spending on unemployment insurance in order to balance the budget. MacDonald had always been averse to partisanship and had earlier urged the parties to put their “ideas in a common pool.” When Labour’s trade union members balked at his cuts, MacDonald created a national unity government with the Tories in 1931 and passed spending cuts and tax increases. By the next year, unemployment in Britain had risen to 22.1 percent from 10.4 percent of the wage-earning workforce in 1929.
In Germany, where the slump had begun in 1928, a coalition led by a Social Democratic prime minister held sway. Both the Social Democrats and their conservative coalition partners were committed to reducing Germany’s rising budget deficits, but the Socialists wanted to do so by borrowing money overseas, while the center-right parties advocated cutting the budget by slashing unemployment insurance. The government split and, in an election in 1930, a center-right coalition led by the Catholic Centre Party’s Heinrich Brüning took power. Brüning drastically cut spending and raised taxes, and, by 1932, when the next elections occurred, the German economy was in ruins. Production was at 40 percent of what it had been in 1929, and unemployment had risen to 33 percent.
In all these cases, the lesson was clear: Cutting spending and raising taxes to balance the budget had made things much worse. And, as these governments discovered, there was a political price to be paid. In the United States, Franklin Roosevelt and the Democrats turned out Hoover and his party by a landslide. The Republicans would not win the presidency again for 20 years and would remain the de facto minority party for almost 50 years. In the October 1931 elections in Britain, the Labour Party suffered its worst defeat. MacDonald would be expelled from the party, and Labour would not regain power until 1945. In Germany, Adolf Hitler’s National Socialist Party would best the other parties in the 1932 elections. And, in January 1933, Hitler would become chancellor.
IN THEIR INITIAL response to the recession of 2008, leaders in the United States and Europe appeared to heed the lessons of the Great Depression. Obama, British Prime Minister Gordon Brown, and French President Nicolas Sarkozy each backed generous government spending programs to revive the economy, and they also advanced proposals for reforming the increasingly dysfunctional international monetary system. In the United States, Federal Reserve head Ben Bernanke and Council of Economic Advisers chair Christina Romer had both made their mark as academics with analyses of the Great Depression. And Britain’s Labour Party had become a bastion of Keynesianism after World War II. In short, there seemed little doubt that the follies of the late ’20s and early ’30s would be avoided this time.
But then problems began to arise. Obama’s initial stimulus proved woefully insufficient to stem the rise in unemployment. The $787 billion federal stimulus included $288 billion in tax cuts, which were as likely to be saved as to be spent; meanwhile, the stimulus was partially offset by an estimated $425 billion in state and local spending cuts and tax increases. The need for more spending was evident to Romer and to liberal economists, including Paul Krugman and former Council of Economic Advisers head Joseph Stiglitz; but Obama failed in his first year to press energetically for additional spending. His influential treasury secretary, Timothy Geithner, believed that, after the initial stimulus, the recovery was proceeding on its own, and Obama’s attention was focused on passing health care reform. By the end of 2009, the failure of the recovery to take hold had emboldened the Republican opposition and given birth to a new right-wing movement, the Tea Party, that called for a drastic reduction of government spending.
Republican victories in the 2010 election led Obama to backtrack. He embraced the rhetoric of austerity—calling on government to “tighten its belt”—and accepted spending cuts in order to pass a budget and win Republican agreement for raising the debt ceiling. Most of these cuts are slated to take place over a decade, but as much as $30.5 billion is to be cut in 2012. In acceding to the uncompromising Republican opposition, Obama made it less likely that the United States would recover from the recession during his first term. Recently, as Obama’s popularity sank, even among Democrats, and as the economy has continued to flounder, he has changed course, calling for $400 billion in new spending and tax cuts to create jobs; but the odds that Republicans will go along with him seem low.
In Great Britain, the dour Brown, who was inept as a politician, was replaced in May 2010 by Tory David Cameron. A modest recovery had begun under Brown, but Cameron, concerned about a rising deficit, slashed spending and raised taxes. Cameron’s five-year plan calls for the elimination of 300,000 public-sector jobs. As a result, growth has slowed to a crawl in Britain. The economy increased .2 percent in the second quarter. And unemployment, which fell in 2010, has begun to rise.
On the continent, the leaders of more prosperous nations have responded to growing unemployment, lagging growth, and the threat of insolvency on the periphery by calling for austerity. Dutch Prime Minister Mark Rutte has proposed appointing a Eurozone commissioner who could expel countries (like Greece) that don’t adhere to strict budget rules. Sarkozy and Merkel have proposed that all the Euro countries pass legislation requiring balanced budgets and balked at creating “Eurobonds” that would give struggling countries access to lower-interest loans. “Austerity is the only cure for the Eurozone,” Merkel’s finance minister, Wolfgang Schäuble, declared in The Financial Times.
SOMETIMES LEADERS do things that harm their own nations because they don’t know any better. Hoover, like many Republicans and Democrats at the time, couldn’t conceive of deficit spending as being beneficial under any circumstances. But others have had choices and have still adopted the alternative that is most damaging to their country. That was true of British Labour during the beginning of the Great Depression—and it is true of the leading American and European politicians who have backed the current round of austerity measures.
There are three factors that explain these bad choices. The most common, but least persuasive, explanation is that political leaders and governments are in thrall to powerful financial interests. The City of London (Britain’s Wall Street) was certainly enthusiastic about reviving the gold standard in 1925 and resisting devaluation afterward; London’s bankers saw the prewar gold standard as essential to maintaining their hold over international finance. In the United States today, bankers on the Federal Reserve’s Open Market Committee have opposed the Fed injecting more money into the economy because it might be inflationary. Inflation reduces the value of the loans that banks have made.
But this explanation is unsatisfying because support for austerity goes well beyond bankers. A second explanation is that national leaders, faced with a severe downturn, model their own reaction for what a nation should do on what an individual business, faced with more efficient competition, would do. They want the government, like a business, to respond by cutting costs rather than increasing debt. They also see public spending and deficits, which must be financed on the same bond market where businesses raise money, as “crowding out” what’s available for private investment. And the more sophisticated see austerity as part of a general strategy—along with eliminating business taxes and regulations—to boost exports and reduce imports. Cutting spending makes it possible to cut taxes on business; less spending on unemployment insurance or welfare puts downward pressure on wages and prices, making it easier to outsell foreign competitors. It is a model that assumes an atomized world economy in which each nation is out for itself. The United States and Europe embraced this “beggar thy neighbor” strategy at the beginning of the Great Depression, and today’s Republicans, as well as Cameron’s Tories and Merkel’s Christian Democrats, do so, too. Japan’s Noda also endorses a version of this strategy.
The third factor has to do with what economist Robert Skidelsky, trying to explain the dogged adherence of MacDonald’s Labour government to the gold standard and to laissez-faire capitalism, called “political culture.” It is particularly relevant to the United States and Britain. Nations, like individuals, grow up with certain assumptions about government and the economy that can persist over centuries. Britain and the United States both have strong anti-statist traditions, dating from the English and American revolutions, that were reinforced by their economic success. Writes the anthropologist Jared Diamond, “The values to which people cling most stubbornly under inappropriate conditions are those values that were previously the source of their greatest triumphs over adversity.”
In the American political culture, opposition to “big government” has become an article of faith that brooks no contradiction. When I was in New Hampshire this summer, I accompanied Republican Congressman Charlie Bass on a visit to a small factory that produces industrial-strength air-conditioning filters. Bass asked the factory owner what he would do first if he were Obama. The owner replied immediately: “Cut spending.” Later, as I was touring the plant, I learned that schools, government buildings, and the military bought their filters there.
As Bass was leaving, I asked the owner whether, in proposing that Obama reduce government spending, he wasn’t cutting off his nose to spite his face. He was taken aback and took a moment to reply. He began by denying that cutting federal spending would have any effect on his business, which was mostly local, but then acknowledged that schools and offices now had less money to buy filters. It was as if he had never made the connection before between his deep-seated cultural assumptions about government and the fate of his own business—and by extension that of other businesses.
Charismatic leaders can reshape and even defy their nation’s political culture. Franklin Roosevelt did so during his first term. But Roosevelt inherited a situation so desperate that the public was willing to tolerate any kind of experimentation. Obama entered office with some of the preconditions for radical reform. Crisis was in the air. Wall Street was in disfavor. Voters blamed the downturn on his Republican predecessor, George W. Bush. And he had the rudiments of a political movement. But the country was not in as desperate shape as it was in 1933, and the opposition was still functioning. To have put in place a program that might have spurred at least the beginnings of a recovery, Obama would have had to be both extraordinarily bold and fiercely combative. And he was neither.
In dealing with the downturn and financial crisis, the president was cautious—as evidenced by his choice of Geithner, who had presided over the Federal Reserve Bank of New York during the crash. Like MacDonald, Obama harbored a dream of bringing the parties and interest groups together behind his program. As The Financial Times’s Martin Wolf put it, “Mr. Obama wishes to be President of a country that does not exist. In his fantasy US, politicians bury differences in bipartisan harmony.” After the bruising battle over the debt ceiling, Obama may have finally put his dream of a post-partisan politics to rest and adopted a more aggressive political style. But the narrow opening for dramatic change that existed in early 2009 has probably closed.
TO EXTRICATE THEMSELVES from this mess, the United States and other leading nations are going to have take the same kind of steps that the West took after World War II—steps that led to 25 years of prosperity. After World War II, governments came to play a much greater role in national economies, particularly in the United States. In 1929, U.S. federal spending accounted for 3.68 percent of GDP. During World War II, it rose to 43.6 percent; by the mid-’50s, it had leveled off between 17 and 23 percent. This spending helped complement private investment and sustain consumer demand.
In the future, the United States will once again have to raise rather than lower the level of federal spending as a percentage of GDP. Republicans want to cap spending at 19 percent of GDP, but, in the wake of the recession, it may have to hover between 25 and 30 percent or perhaps climb even higher. That’s because of an aging population that will need public services, the growing importance of publicly funded science and technology, the need to transform the nation’s energy and transportation networks, and the impact on employment of the trend toward automation in manufacturing and services. Even if the U.S. economy grows at a healthy pace, the private sector may not provide enough jobs.
The United States and other nations will also have to reform the world’s monetary system—again—in order to instill a sense that we, the world’s nations, are all in it together. Near the end of World War II, the United States, with Britain as a junior partner, established the Bretton Woods international monetary system. That eliminated a major source of instability and division that had arisen when the older British-based gold standard had broken down. The Bretton Woods system was based on the dollar’s equivalence to gold, but, unlike the older system, it allowed countries other than the United States to devalue or revalue their currencies and thereby reduce either their trade deficits or surpluses.
In the 1970s, Bretton Woods broke down. The new dollar-based system has fueled a succession of crises. It has been held together tenuously by a triangular relationship among the United States, Japan, and China in which the Asian countries have sought to maintain their export surpluses with the United States by keeping their currencies undervalued. Rather than exchanging their surplus dollars for their own currency, they have used the dollars to buy U.S. government or private securities. They have funded U.S. deficits, but also helped provide the money that inflated the housing bubble. As the recession set in, China, in particular, has been in a position to alleviate the crisis and to confound the paradox of thrift by substantially revaluing its currency, which would encourage exports from the United States and Europe—but it has balked at doing so. In effect, China, too, has followed a strategy of “beggar thy neighbor.”
To escape the recession, the leading nations, including China, would have to establish a new international system that could avoid these kinds of imbalances. But how? The economic historian Charles Kindleberger pioneered the argument that a stable, well-functioning international system requires a single, leading nation—an absolute monarch. But no country will be ready within a decade or two to assume the role that the British played in the nineteenth century or the United States played after World War II. This means the leading countries will have to reach agreement among themselves. And that won’t be easy, particularly as a version of economic isolationism gains ground.
OBAMA IS UNLIKELY to get substantial spending increases through the Republican House during the next year, and, even if he wins reelection, he probably won’t have large enough majorities in Congress to force through the kind of spending the economy needs. Indeed, as a second-term president, he would likely be in the same position as MacDonald in 1931, presiding over a national government that he ultimately does not control.
Romney and Rick Perry, the two leading candidates to replace Obama, are both business conservatives who can be expected to take their cues on economic policy from the Chamber of Commerce, Wall Street, and the Business Roundtable rather than from the Tea Party. Romney, who cherishes the image of himself as a pragmatic turnaround artist, may prove more adaptable to economic circumstances than Perry. In his appearances, Romney sends out dog whistles—audible to liberals—that he is not as economically radical as his opponents. For his part, Perry should not be dismissed as an anti-government activist. A Tea Party enthusiast would not have established the Texas Emerging Technology Fund, which uses government money to boost high-tech business ventures.
If they are faced with a continuing slowdown, Romney or Perry would be likely to support what they would think of as a stimulus program—one that is heavily weighted toward reducing business costs through cutting corporate tax rates, eliminating capital gains taxes, reducing or eliminating regulations, and discouraging unionization. The hope will be, as Romney has put it, to make “American businesses competitive in the global economy.” But such a strategy assumes that there is a backlog of demand for U.S. consumer and capital goods that firms would meet if government increased their potential profit margins. In a global downturn, that’s not necessarily the case. Such an approach would probably do what Calvin Coolidge, Ronald Reagan, and George W. Bush’s economic proposals did: redistribute wealth and income from the bottom toward the top—out of the hands of people who are most likely to spend what they have and into the hands of people most likely to save rather than spend. In a downturn, that’s not a good strategy for getting the economy going.
The policy outlook is similarly grim in Europe. To remain viable, the Eurozone will have to widen its responsibility for the economic health of the weaker, peripheral nations that are tottering under debt and exorbitant interest rates. But France and Germany are urging these countries to escape their debts by drastically cutting spending; that, again, will reduce demand in the Eurozone during a downturn. And powerful conservative forces within the wealthier countries—asking, “Why should we help them?”—are against any expansion of fiscal responsibility in the Eurozone.
In the ’40s, it finally took a world war to bring about the conditions for reforming the world’s leading economies. The war established the United States as the unchallenged leader of world capitalism, and it convinced Washington that a renewed strategy of “beggar thy neighbor” would be self-destructive. The popular New Deal reforms also established a floor under government’s role. Western Europe and Japan followed America’s lead. Will it take another global catastrophe to convince the leaders of the United States, Europe, and Asia to halt the repetition of past errors—to recognize that they need to establish a new economic order? What will it take to convince the people of the United States that they have to overcome their cultural predilections against big government? These are the questions that will have to be answered over the years, but, in the coming election, I would expect they would meet with the same Cheshire Cat grin that I received when I asked Romney whether he wasn’t calling on America to repeat Hoover’s mistakes.
John B. Judis is a senior editor at The New Republic and a visiting scholar at the Carnegie Endowment for International Peace. This article appeared in the October 6, 2011, issue of the magazine.





- Concern turns to panic as global markets brace for gloomy future of low or no growth

Jennifer Hewett, National affairs correspondent



THE International Monetary Fund calls it a "dangerous new phase". The US Federal Reserve Board talks about "significant downside risks to growth" in the US economy. British Prime Minister David Cameron says the eurozone crisis "threatens the stability of the world economy".
Under the political rhetoric, the markets follow a more brutal logic. Fear has been rapidly turning to panic, reflected in the massive falls in global sharemarkets in recent days. The Australian market did creep back a little to record minor losses yesterday after an initial sharp drop in response to what had happened in Europe and the US.
But no one can predict exactly what the result will be if this sense of market hysteria and economic gloom continues. A Greek default leading to financial contagion and bank runs? The collapse of the euro? A far more savage recession across the world? The only certainty is that the outlook is suddenly very, very scary.
That's why the scheduled meetings of the IMF and World Bank and the G20 in Washington happened to be perfectly timed to try to stop the rot and announce decisive and co-ordinated action. Yet the politicians seem paralysed by the costs of anything else but more of the same.
The G20 put out a tough-talking communique to try to reassure the market, insisting that the countries would "take all necessary actions to preserve the stability of banking systems and financial markets as required".
How that will actually play out during the next few weeks is, however, far less clear.
Certainly the circuit-breaker is not apparent.
The strong woman of Europe, Germany's Angela Merkel, for example, is stuck fast between the need for Germany to pay up big to try to restore stability in weaker countries and the resistance of German citizens to what they regard as sending their own good money after bad.
The pattern so far has been reluctantly making more loans to Greece but only on the basis the Greeks will stop spending and learn to love austerity for years to come, even as their citizens riot in the streets.
It has been the European Central Bank buying a limited amount of bonds from the Spanish and Italian governments, even as the markets bet against the level of buying and commitment being anywhere near adequate.
The aim now is to shore up shaky European banks with injections of capital but probably not by enough to convince nervous investors.
One alternative would be a guarantee by the combined governments via the European Central Bank and the special European bailout fund to spending whatever it takes to renew investor confidence, financial stability and economic growth.
One fundamental problem with this is that most governments are out of the ready cash and willingness or ability to borrow that allowed them to push out huge amounts of stimulus money to ward off the spectre of global financial collapse in 2008 and 2009. That worked well enough to bolster threatened bank balance sheets at the time but left many of the governments with colossal deficit and debt problems. In effect, it transferred the cost to taxpayers. Then the banks, forced to increase their levels of more reliable capital than all that frothy hot money, invested more heavily in what was supposed to be the safe option, sovereign debt.
None of this has gone according to plan in Europe, of course. Instead, it has produced a corrosive cycle in various European nations where increasing doubts about governments' ability to pay infect the strength of bank balance sheets, which in turn makes it still harder and more expensive for governments under pressure to borrow. That requires ever more austerity plans, ensuring that business and consumer confidence and any prospect of economic growth is killed off.
Greece's debt problems, for example, are dire in national terms but shouldn't be too overwhelming compared with the size and power of the entire eurozone, led by Germany and France. But months of dithering and threats about making Greece get serious about austerity has only ensured the market is expecting a Greek default.
After all, the only way for an economy to manage its debt burden is to be able to grow sufficiently to steadily pay down the debt across time. That clearly won't happen in Greece.
Everyone else, including banks, will have to take losses, too.
But the German government knows its angry citizens are not persuaded by the argument that letting Greece go under would be worse for them as well as for the Greeks. It turns out that the idealistic vision of European integration doesn't make much sense in practice in tough times, only made worse by the euro that was supposed to build unity and strength. One-size currency certainly doesn't fit all, let alone Germany and Greece.
For all the suggestions of ceding political authority to some greater European body, nationalism is on the rise from Athens to Berlin.
At the same time, the dithering and prospect of Greek default has led to increasing doubts about the ability of the much larger economies such as Italy and Spain to manage their vast debts, especially with their interest rates rising.
The downgrading of Italy's credit rating by Standard & Poor's last week has only exacerbated that. Who's next, what's next? And who can afford that?
Not that the Europeans can take all the credit for chaos. It's not as if there's any sign of the US engine of economic growth sputtering back into life. In fact, the Federal Reserve's attempts to calm the situation last week backfired badly.
The markets interpreted the central bank's much promoted "Operation Twist" - where it sold short-term bonds in favour of longer-term bonds - as a totally inadequate way of getting more money into the economy.
The Fed's pessimistic statements about growth only compounded the misery.
Now, with US unemployment stuck above 9 per cent, a devastated housing market and an impasse between the Republicans and Democrats, American political leadership manages only a passing grade by comparing it with the even worse European version. Or, rather, versions.


- Global economy alarm bells ring

By Chris Isidore @CNNMoney
Manufacturing slowdowns across the globe, from China to Europe to the United States, have investors and economists worried.
Manufacturing slowdowns across the globe, from China to Europe to the United States, have investors and economists worried.
NEW YORK (CNNMoney) -- The recession alarm bells were ringing across the globe Thursday, spooking investors and economists alike.
The latest monthly readings released Thursday on manufacturing in the eurozone, the U.K. and China all were weaker than they had been, as was a report on the service sector in Europe.
With the Federal Reserve warning Wednesday that the U.S. economy is facing "significant downside risks," and stocks and commodityprices falling around the world, it is clear there are ample reasons for worry.
"There's a global slowdown underway, probably a recession for Europe and we're teetering on the edge of one," said Keith Hembre, chief economist for Nuveen Asset Management. "There's just one global economy, one with varying degrees of global pain."
The European manufacturing and service sector figures from Markit Economics were particularly worrisome, as each shifted from showing modest growth to declines in September. They were the worst readings since July 2009.
Even activity in the stronger European economies, such as Germany and France, declined to near the break-even point.
10-year hits record low
In the U.K., the CBI manufacturing index showed 9% more manufacturers reporting weaker than normal orders rather than better than normal demand. British manufacturers cited "the volatility in financial markets and the slowdown in growth in [their] major trading partners."
And the HSBC manufacturing index for China for August, also released Thursday, also showed a pullback on production and new orders.
John Higgins, senior markets economist for Capital Economics, said the European readings are the "the strongest sign yet that the region is on the cusp of recession." That's particularly troublesome since Europe's economy could get worse if there is a default in sovereign debt by Greece.
Higgins added that the slowdown in manufacturing in China is a worry given the importance that China has played as the engine of global growth coming out of the Great Recession.
"There is a broad brush concern that even if the Chinese economy is not shrinking, it is slowing, and that slowing is bad news for the rest of the world," he said.
A decline in global economic activity is relatively rare -- 2009 was the only year since World War II that occurred, said Sal Guatieri, senior economist at BMO Capital Markets. But he said a global decline isn't necessary for the economic weakness to spread among major economies.
"We still don't anticipate a global recession, but admittedly the odds are rising," he said.
Economists say the Fed may not help much either .The central bank is seeking to lower already low interest rates further through a process dubbed Operation Twist. But it's doubtful that will restart growth in developed economies like the United States, Europe and Japan.
Thursday's weak economic readings only amplified those fears.
"Investors are losing their faith in policymakers' ability to right these economies," said Higgins. "Especially in the advanced economies, policymakers are lot more impotent than they were three years ago during that crisis. People are very skeptical there's any silver bullet." To top of page





- Greek Crisis Comes 24 Centuries After First Default

By Simon Kennedy and Maria Petrakis
History’s first sovereign default came in the 4th century BC, committedby 10 Greek municipalities. There was one creditor: the temple of Delos, Apollo’s mythical birthplace.
Twenty-four centuries later, Greece is at the edge of the biggest sovereign default and policy makers are worried about global shock waves of an insolvency by a government with 353 billion euros ($483 billion) of debt -- five times the size of Argentina’s $95 billion default in 2001.
“There is a monstrously large amount of uncertainty and a massive range of possibilities,” said David Mackie, chief European economist at JPMorgan Chase & Co. in London. “A macroeconomic disaster could be averted but only by aggressive policy action” by central banks and governments, he said.
After two international-bailout deals, three years of recession and budget-cutting votes that almost cost him his job, Greek Prime MinisterGeorge Papandreou says throwing in the towel now would be a “catastrophe.” Potential consequences of a national bankruptcy include the failure of the country’s banking system, an even deeper economic contraction and government collapse.
The fallout may echo the days following the 2008 implosion of Lehman Brothers Holdings Inc. when credit markets froze and the global economy sank into recession, this time with the prospect that the 17-nation euro zone splinters before reaching its teens. The International Monetary Fund, whose annual meetings start in Washington today, reckons the debt crisis has generated as much as 300 billion euros in credit risk for European banks.
Default Risk
Greek two-year yields surged above 70 percent today and credit-insurance prices on Greece indicate the chance of default at more than 90 percent. Investors can expect losses on Greek debt of as much as 100 percent, says Mark Schofield, head of interest-rate strategy at Citigroup Inc. in London.
“People, justifiably, think the crisis is what we’re living now: cuts in wages, pensions and incomes, fewer prospects for the young,” Greek Finance Minister Evangelos Venizelos told reporters yesterday in Athens. “Unfortunately this isn’t the crisis. This is an attempt, a difficult attempt, to protect ourselves and avert a crisis. Because the crisis isArgentina: the complete collapse of the economy, institutions, the social fabric and the productive base of the country.”
Even if Greece receives its next aid payment, due next month, default beckons in December when 5.23 billion euros of bonds mature, saidHarvinder Sian, senior interest rate strategist at Royal Bank of Scotland Group Plc.
‘Too Late’
“It’s too late for Greece,” Howard Davies, a former U.K. central banker and financial regulator, told “Bloomberg Surveillance” with Tom Keeneand Ken Prewitt. “The Greek situation is tumbling out of hand and I suspect Greece will not be able to avoid a substantial default.”
The introduction of the euro and global financial connections mean previous Greek defaults in the 19th and 20th century, most recently in 1932, don’t provide a decent precedent for a failure to satisfy lenders now.
“Contagion will be violent” as the price of the two-year Greek note tumbles below 30 cents per euro, predicts Sian. The European Central Bank would be the first responders through purchases of government debt, he says.
Greek Banks
The country’s banks, of which National Bank of Greece SA (ETE) is the largest, would be the next dominoes. They hold most of the 137 billion euros of Greek government bonds in domestic hands, a third of the total and three times their level of capital and reserves, says JPMorgan Chase. As those bonds are written down and equity wiped out, banks would lose the collateral needed to borrow from the ECB and suffer a rush of withdrawals that likely triggers nationalizations, said Commerzbank AG economist Christoph Balz.
“No banking system in the world would survive such a bank run,” said Frankfurt-based Balz.
A hollowed-out banking sector wouldn’t be the only danger to an economy that the IMF says will contract for a fourth year in 2012. The Washington-based lender said this week that Greece will shrink 5 percent this year and 2 percent next year, reversing a forecast of a return to growth in 2012.
Unemployment is set to rise to 16.5 percent this year, and to 18.5 percent next year, the highest in the European Union after Spain and dry kindling for potential social unrest.
Even after saving 14 billion euros in debt repayments, much depends on what deal Greece could strike with its creditors.
Debt Load
To restore market confidence the debt needs to be pared to below 100 percent of gross domestic product, Stephane Deo, chief European economist at UBS AG, said in a July study that noted national default was “invented” in Greece with the Delos Temple episode. At the time, the IMF was projecting the debt to peak at 172 percent next year.
The current debt suggests to him a reduction in the face value of outstanding securities -- or haircut -- of about 50 percent, which would pare the burden to around 80 percent of GDP, the same as Germany and France. Citigroup’s Schofield estimates a writedown of 65 percent to 80 percent, potentially rising as high as 100 percent as the economy slows further.
If default is limited to Greece, the fallout may be contained, say Nomura Securities International Inc. strategists including New York-based Jens Nordvig, whose projections allow for an 80 percent haircut. They estimate euro-area banks would lose just over 63 billion euros, with German and French institutions losing 9 billion euros and 16 billion euros respectively. The ECB would face about 75 billion euros in losses on Greek debt it has bought or received as collateral, they say.
‘Large Haircuts’
Such amounts suggest “the losses from Greece-related exposures in isolation look manageable, even in a disorderly default scenario with large haircuts,” though the ECB would probably require fresh capital from euro-area governments, Nordvig and colleagues said in a Sept. 7 report.
A debt exchange that was part of the second Greek bailout approved by European leaders in July would impose losses of as little as 5 percent on bondholders, according to a Sept. 7 report by Barclays Capital analysts.
The risk is that the rot spreads beyond Greece as investors begin dumping the debt of other cash-strapped European nations, said Ted Scott, director of global strategy at F&C Asset Management in London. Portugal and Ireland have already been bailed out, while speculators have also tested Italy and Spain. Italy, the world’s eighth-largest economy, has a debt of almost 1.6 trillion euros, while Spain, the 12th biggest economy, owes 656 billion euros.
‘Grand Solution’
Those possible ripple effects explain why policy makers won’t let Greece default, said Charles Diebel, head of market strategy at Lloyds Bank Corporate Markets in London. He expects them to strike a “grand solution” in which richer euro countries such as Germany support the weak and begin issuing joint bonds.
Policy makers “would only allow a Greek default if they think they can contain the fallout, which is a dangerous presumption,” said Diebel.
If Greece, Ireland, Portugal and Spain all impose haircuts, European banks could lose as much as $543 billion with those in Germany and France suffering the most, according to a May report by strategists at Bank of America Merrill Lynch.
Even those figures don’t tell the full story because they omit indirect exposure via derivatives such as credit-default swaps. Economists at Fathom Financial Consulting in London calculated in June that U.K. and U.S. banks hold such insurance on Greek debt totaling 25 billion euros and 3.7 billion euros respectively. Extend that metric to the whole European periphery and U.S. banks have a 193 billion euro exposure.
‘Even Worse’
Such linkages threaten an “even worse crisis” than the folding of Lehman Brothers, said Scott. “The amount of outstanding debt is more than with Lehman and we don’t know the amount of derivative exposure.”
To support the financial system and stave off an economic slump, Carl Weinberg, founder of High Frequency Economics Ltd. in Valhalla, New York, says governments must create a fund to inject capital into banks as the U.S. did with its $700 billion Troubled Asset Relief Program.
“If banks fail, or if they fear big losses, they will stop lending,” said Weinberg. “As things stand today, a credit crunch will corset euroland and a depression will ensue when Greece fails and takes out euroland’s banking system.”
G-20 Signals
Signaling efforts to contain the crisis, European officials including French Finance Minister Francois Baroin yesterday said they may be willing to use leverage to boost the firepower of their 440 billion-euro bailout fund. Group of 20 finance chiefs said after talks in Washington late yesterday that European authorities are willing to “maximize” the fund’s impact by the time the group next meets Oct. 14-15.
The ECB may also intensify its own attempts to support growth and ease financial market tensions as early as next month, Governing Council members Ewald Nowotny and Luc Coene said. Potential measures include the reintroduction of 12-month loans to banks, while JPMorgan Chase’s Mackie said today he expects the central bank to cut its benchmark interest rate of 1.5 percent next month.
BofA-Merrill Lynch economist Laurence Boone calculates a disorderly Greek default with spillover into Spain and Italy could mean the euro-area contracts 1.3 percent in 2012, using the Lehman Brothers episode as a benchmark.
Waiting for Surplus
Her “high probability” scenario of a Greek restructuring in 2013 when Europe’s permanent crisis resolution mechanism is operational and Greece is closer to having its primary budget in balance suggests growth of 1 percent next year. The “increasingly likely” option of an orderly restructuring at the end of this year would mean expansion of 0.1 percent, she projects.
Hanging over the debate is also whether Greece could default and remain a member of the euro area. Nouriel Roubini, co-founder of Roubini Global Economics LLC in New York, proposes that default -- and an end to debt repayments and required austerity measures -- be twinned with an exit from the euro --an approach rejected by European and Greek policy makers -- to restore competitiveness and debt sustainability.
Rebounds
After shrinking 10.9 percent in 2002 following its decision to default and devalue, Argentina’s economy grew eight years straight, exceeding 8 percent in every year aside from 2008 and 2009. Russia was growing in double digit just two years after defaulting on $40 billion of local debt in 1998.
In contrast, facing only hard choices, EU officials have taken half-measures in the hope that the situation would somehow turn around, said Rodrigo Olivares-Caminal, senior lecturer in financial law at the University of London.
“What they have done so far is a patchwork approach,” he said. “Now things are much worse. It’s becoming more expensive not only in economic terms but also in social terms for Greek citizens because now there will be redundancies, now there will be more taxes there will be less jobs and things will get worse.”



- Warning of a stock market rout unless a eurozone rescue package is found

Obama urges France and Germany to move quickly to find a solution to the eurozone crisis, while UK chancellor George Osborne claims Britain is 'ahead of the curve'

EU leaders were under renewed pressure today to agree immediate steps towards a full-scale rescue of ailing eurozone economies or risk a stock market rout when exchanges open on Monday.
Fears that months of debate over how to resolve the Greek debt crisis had brought the world economy to another "Lehman's moment" led several prominent analysts to warn that the situation could spark a run on bank stocks next week.
President Obama and the US treasury secretary, Tim Geithner, welcomed a commitment by the European Central Bank to step up its efforts to boost growth, which could mean a cut in interest rates at its next meeting in October, but pressed France and Germany to move quickly with a rescue package to prevent further turmoil.
George Osborne warned that the leaders of the eurozone had six weeks to end their political wrangling and resolve the continent's crippling debt crisis.
Eric Wand, a gilts strategist at Lloyds Corporate Markets, said: "If we come in on Monday with nothing on the table, then we'll be back to the races."
Wand warned that loans from the ECB would be more sticking plaster and unlikely to satisfy investors. "[They] are hoping for a co-ordinated policy response. If we get that, then risk assets could rally, but for how long? More liquidity doesn't really cut the mustard," he said.
Stocks rallied today after G20 leaders said they would do all in their power to prevent another crash. The FTSE rebounded after the assurance to finish the day up 25 points at 5066 while the German Dax and French CAC both ended the day marginally higher.
But a week of speculation that several eurozone banks could be wrecked by defaults in the peripheral countries without further ECB support and large capital injections has helped knock $3.4tn (£2.2tn) off global stock values since Monday. The FTSE had its second worst week this year and French and German exchanges remain at two-thirds of their value in July.
Commodities fell to a nine-month low as silver, copper and nickel tumbled. The Standard & Poor's GSCI Index of 24 commodities fell as much as 2.2%, leaving it 7.8% lower than at the start of the week.
Speaking in Washington, Osborne said that the turmoil in the world's financial markets meant there was now "a far greater sense of urgency" and mounting pressure on Europe from the G20 group of developed and developing nations.
"There is a sense from across the leading lights of the eurozone that time is running out. There is a clear deadline at the Cannes (G20) summit in six weeks time," the chancellor said. "The eurozone has six weeks to resolve this political crisis."
He added that "bad politics" were leading to "bad economics" in the eurozone. "We need political solutions that can help resolve the economic problems."
Osborne said the package of measures agreed in July to provide financial support for troubled members of the single currency needed to be implemented, as well as ensuring banks had enough capital to withstand market pressures.
"I wouldn't say all the pieces of the jigsaw are in place," Osborne said, adding that the members of the eurozone had to supplement monetary union with closer fiscal ties.
While the government had no intention of joining monetary union, the chancellor said it was in Britain's interests for the eurozone to work. "The break-up of Europe would be bad for Britain."
The chancellor said Europe needed to show that it had enough firepower to convince the markets it was getting ahead of the curve, and made it clear that the €440bn European Financial Stability Facility needed to be beefed up. "I am not sure it is adequate," Osborne said.
He refused to speculate on whether Greece would be forced to default on its debts, but said the government had contingency plans in the event that the worst-affected eurozone country did capitulate. "I have made it a priority for the Financial Services Authority and the Bank of England to make sure that the UK banking system is adequately capitalised and have sufficient liquidity to deal with all eventualities. We have stress-tested sovereign writedowns."
Osborne admitted that the darkening international economic outlook would have repercussions for the UK but insisted that he had no intention of amending his tough deficit reduction plans. It was up to the Bank of England, he added, to support demand over the coming months.
"A credible fiscal plan allows you to have a looser monetary policy than would otherwise be the case. My approach is to be fiscally conservative but monetarily active."
His comments come amid signs from Threadneedle Street that it would restart its quantitative easing programme over the coming months. The Bank pumped £200bn of electronically created money into the economy between early 2009 and early 2010 in an attempt to lift the economy out of recession.
Asked how bad the situation in the UK would have to get before he would consider changing course, Osborne said: "The UK is taking appropriate action. It is very clear what has got to happen. We are sticking to the plan. These discussions in Washington are about the eurozone and the challenges there, not about market pressures on the UK. We have got ahead of the curve and have credibility."
The chancellor said the heavily indebted state of Britain meant that he could not simply "pull a lever" to boost demand. "This was a different sort of recession and it is a different sort of recovery," he said.He added that there was a certain amount of flexibility built into his budget plans because weaker growth would allow the automatic stabilisers – a bigger budget deficit caused by higher benefit payments and lower tax receipts – to kick in.
The government would announce supply-side reforms of the economy to remove obstacles to growth over the coming months, Osborne said.






- ['We Won't Pay' -
Greece's Middle Class Revolt against Austerity->http://www.spiegel.de/international/europe/0,1518,787847,00.html]

By Ferry Batzoglou and Jörg Diehl in Athens

Small business owners in Greece have long been the backbone of the economy and reliable taxpayers in a country where tax evasion is rampant. That, though, is now changing. Self-employed workers like Angelos Belitsakos have had enough of rising taxes and have begun to revolt.
Info
The people who could ultimately give Greece the coup de grace are not the kind to throw stones or Molotov cocktails, and they have yet to torch any cars. Instead, they are people like 60-year-old beverage distributor Angelos Belitsakos, people who might soon turn into a real problem for the economically unstable country. Feeling cornered, he and other private business owners want to go on the offensive. But instead fighting with weapons, they are using something much more dangerous. They are fighting with money.
Belitsakos is a short, slim and alert man who lives in the middle-class Athenian suburb of Holargos. He is also the physical and spiritual leader of a movement of businesspeople in Greece that is recruiting new members with growing speed. While Greece's government is desperately trying to combat its ballooning budget deficit by raising taxes and imposing new fees, people like Belitsakos are putting their faith in passive resistance.
The group's slogan is as simple as it is stoic: "We Won't Pay."
Working 12-Hour Days, Seven Days a Week
This business owners' absolute refusal to pay any taxes resembles an uprising of the ownership class, rather than the working class, a rebellion of the self-employed business owners who have long been the backbone of Greek society. These are not the people who weaseled their way into Greece's oversized civil service; these are people who put their money in the private sector, working 12-hour days, seven days a week. Or so Belitsakos says.
Standing in his small store, Belitsakos makes a sweeping gesture and says that the people in his movement no longer have a choice. "The state will kill us," he says. "We're acting in self-defense." Then he starts to do the math. Over the last two years, his sales have massively shrunk as 60 of the tavernas and restaurants he used to make deliveries to have terminated their contracts with him. At the same time, the government has raised the value-added tax (VAT) twice while imposing a never-ending series of new fees. He mentions the €300 ($406) one-time fee for the self-employed, a two-percentage-point boost in the VAT, a €180 solidarity levy for the unemployed and a property tax that is "easily a few hundred euros every year."
The taxes are part of Athens' last ditch effort to avoid drifting into insolvency and to live up to the promises of austerity it delivered to the European Union. The country's vast debt means it is already reliant on the steady drip of aid it receives from a €110 billion rescue package passed last year, with a second such package likely to be passed this fall. But each payment from the fund is dependent on progress being made on the effort to clean up the country's finances.
That progress has been halting at best. In an effort to move the process forward, the government of Prime Minister Giorgios Papandreou has recently announced it intends to cut thousands of more civil servant jobs. And it introduced a controversial one-off property tax which has angered many. Several other taxes and fees have also been introduced.
Belitsakos calls them "charatzi," a word from Ottoman times that can perhaps best be translated as "loot" or "compulsory levy." The term is meant to indicate taxes levied arbitrarily and without justification, such as the tithe once paid to feudal lords. "But I can't and won't pony up. It's wrong," Belitsakos says. "Don't you understand?"
A Common Type of Revolt
The situation finally drove Belitsakos to write a letter to the head of the local tax authority in the name of his group. "We see ourselves facing a whole series of new taxes," he wrote. "We are protesting and enraged." He went on to charge that the only purpose behind the new fees was the "dispossession and impoverishment" of the Greeks and that he was now forced to resist. Briefly put, he wrote: "We won't pay."
Belitsakos says the tax official he handed the letter to was understanding and friendly. The fact that the civil servant put on a brave face might have something to do with all the TV cameras that were present. But, in a place like Greece, it is also entirely possible that the official was simply not all that surprised that someone would announce they were evading their taxes.
As well-known analyst Babis Papadimitriou puts it, the average Greek may well love his country, but he views the state apparatus as a power that one can and should plunder. Papadimitriou says that while the European average for VAT taxes that are evaded is 10 percent, the rate in Greece is roughly 30 percent. About a third of the entire economy happens off tax-authority radars.
You Can't Lose If You Don't Play
These days, even communists, unionists and leftists are raising a public outcry against the new taxes. This week, Aleka Papariga, the general secretary of the Communist Party of Greece, said that the only way to stop the complete bankrupting of the people was for them to not pay the "charatzi." In fact, financial resistance had now become the supreme civic duty, she said.
In an interview with SPIEGEL ONLINE, Greek Economy Minister Michalis Chrysochoidis said: "The question is how we can create a feeling of solidarity. One for all and all for one, that's what it's about now." Still, Chrysochoidis would not answer his own question. For the moment, he said, it doesn't look like the government can count on many of their fellow Greeks being willing to sacrifice themselves for the interest of the state. In fact, people are abandoning the government in droves.
Belitsakos, the beverage distributor, can't and won't play a role in rescuing his country no matter what. The reason has nothing to do with patriotism. Instead, it has to do with his mistrust of the government in Athens and "international financial capitalism" and the fact that, despite having once studied mathematics, he still can't fathom the amount of money at stake here.
Belitsakos stresses that his plan is to refuse to pay any and all taxes and fees. If he has to, he says he will either go broke, to jail or both. He is convinced that there are thousands upon thousands who think just like he does and that, in the end, the Greeks will win this battle that they never chose.
The only question is what they really have to win.

- A Quick Global Tour Of The World's Economic Meltdowns


Europe is wrestling with a debt crisis. Economic growth in powerhouse China appears to be slowing. And in the United States, political paralysis has left policymakers with few tools to fight a slowdown. Christine Lagarde, head of the International Monetary Fund, warned this week that the world was entering a "dangerous phase."
The leader of the World Bank said he loses confidence daily that the global economy can avoid a new recession. Financial markets fear the worst. The Dow Jones industrials fell almost 6 percent Wednesday and Thursday before an uneasy calm returned Friday.
The carnage hit markets in Europe and Asia, too. Pick a spot on the globe and you'll find economic trouble. Here's a region-by-region guide to what worries the experts.
European policymakers have failed to convince financial markets that they can resolve a massive debt crisis. Investors fear that Greece and other countries will be unable to pay their debts and default, forcing banks to absorb big losses on government bonds. Greece, Ireland and Portugal have already required bailouts from the European Union and the IMF.
Italy and Spain, which are much bigger economies, might need them, too. A $149 billion bailout has kept Greece afloat for the past year. It's due for another $148 billion rescue negotiated over the summer. But creditors are balking at delivering the second package. They say Greece has fallen behind on commitments to cut government deficits and make its economy more competitive. European officials are speaking openly of the possibility of a Greek default.
The fears have spooked international markets. A default by Greece or any of the other troubled European countries would send shock waves through the banking system and the global economy. Investors are terrified they'll endure a repeat of the panic that struck Wall Street in 2008. Then, banks stopped lending to each other because they were worried about each other's solvency.
Losses on European government bonds could start a similar crisis. If global credit markets were to freeze the way they did three years ago, that would slow economies on both sides of the Atlantic. European governments have opted for austerity measures, cutting spending and raising taxes instead of taking steps to jump-start sputtering economic growth.
Recent reports suggest the European economy is already decelerating. The IMF just shaved its forecast for European growth this year to 1.6 percent from 2 percent, and for next year to 1.1 percent from 1.7 percent. One closely watched index of industrial activity just signaled an outright contraction. Pressure is growing on the European Central Bank to reverse course and start cutting interest rates. Just two months ago, the central bank was worried about inflation and was raising rates.
U.S. markets sank this week even though the Federal Reserve offered a bigger dose of economic stimulus than investors had expected: The Fed plans to reshuffle $400 billion of its investments in hopes of pushing down interest rates on mortgages and other long-term loans. Lower rates are supposed to coax consumers and businesses into borrowing and spending.
The Fed also plans to invest proceeds from maturing U.S. Treasury debt into mortgage bonds in an effort to support the housing market. But economists say the Fed's effort — dubbed Operation Twist after a similar Fed program conducted during the Chubby Checker dance craze of the early 1960s — probably won't make much difference. Rates on mortgages and other loans are already the lowest in decades.
Frightened Americans would rather cut their debts than borrow, and businesses aren't seeing enough sales to justify hiring and expanding despite rock-bottom borrowing costs. The Fed's announcement underscored the fear that the American central bank had run out of tools to stimulate the economy. That leaves fiscal policy — government spending programs and tax cuts — as the only other way to juice growth.
But political bickering is preventing Washington from doing much of anything. Congressional Republicans are focused on cutting government deficits, not widening them in the name of helping the economy. They are resisting President Barack Obama's $447 billion plan to generate jobs with payroll-tax cuts and more spending for roads, bridges, schools and other infrastructure projects.
Economist Eswar Prasad of Cornell University says the U.S. government should tolerate higher deficits now to spur economic growth — as long as it delivers a credible plan to bring its budget under control in the future. "We are seeing the exact opposite," he says. The government is cutting spending now, but has yet to deliver a realistic plan to curb medium- and long-term deficits.
The powerful Chinese economy is supposed to account for a third of global growth this year. Increasingly, other countries depend on China's insatiable demand for raw materials and machinery to give their own economies a lift. The mining towns of western Australia, for instance, are booming as they fill orders from China for iron, zinc and coal.
So any signs the Chinese economy might be slowing are sure to frazzle investors. And a report this week showing that Chinese manufacturing is contracting sent financial markets into a tailspin. Perhaps it shouldn't have been a surprise: China's central bank has been raising interest rates to slow growth and bring inflation under control. Analysts say investors overreacted to one limited report.
The world's second-biggest economy may be slowing, they say, but it still boasts enviable rates of growth. The IMF this week lopped just a tenth of a percentage point off its estimate for Chinese economic growth this year, bringing it to a still-sizzling 9.5 percent. Its estimate for the U.S. is just 1.5 percent.
Yet despite China's rising power, experts say its economy is still not big or strong enough to compensate for meltdowns elsewhere: Chinese investment and spending is only one-sixth that of the European Union and United States. "From a global perspective, China's domestic demand is still way too small to offset the impact of a recession" in Europe and the U.S., Deutsche Bank economist Ma Jun said in a report.
To make up for a 3 percentage point drop in growth in those economies, China would have to grow by 18 percent this year, he says. "This is mission impossible."