European and American financial markets watchers continued to press for action on the crisis in the Eurozone, with signs the German Parliament is poised to support creation of a European Monetary Fund, and high level support emerging for a an EU-wide financial transactions tax.
Equities markets across Europe were down slightly overnight, with the FTSE100 standing at, 5,217.63, down 1.44% at 7.30 a.m. NZT, the German DAX index down 0.89% at 5,578.42, and the Stoxx Europe 50 down 0.79% at 2,176.64.
In the U.S. the Down Jones Industrial Index was down fractionally at 11,116.70 after rising a little earlier in the day, while the S&P500 was off 1.13% slightly at 1,162.12 as one leading pundit, Nouriel Roubini of Roubini Global Economics saying Europe and the U.S. were 'running out of policy bullets' to fix the current crisis.
However, one key new proposal gaining ground is the call from European Commission president Jose Manuel Barroso for the imposition of a financial transactions tax within the eurozone.
The proposal would aim to raise US$78 billion annually and come into effect in 2014, placing a 0.1% impost on all transactions involving EU-based institutions, and a 0.01% tax on financial derivative contracts.
Barroso said banks had contributed to the ongoing crisis in the world’s largest economies and that a financial transaction tax, sometimes called a “Tobin tax”, would ensure “the financial sector makes a fair contribution at a time of fiscal consolidation in the member states.”
However, the BBC reports the U.K. government is already signalling its opposition to the proposal.
Meanwhile, the German Chancellor, Angela Merkel, continues to fight for a parliamentary majority to approve an expansion of the European Financial Stability Facility, a stop-gap measure ahead of the potential for the creation of a new European Monetary Fund and the introduction of collectively issued Eurobonds to help fund the region’s debt crisis. A vote is due on Thursday, European time.
Elsewhere, Reuters reported stiff resistance from private sector lenders to informal proposals to require a greater write-off of Greek government debt than the 20% they are currently being asked to shoulder as part of the rescue plan for the poster-child economy for Europe’s woes.
With global leaders growing increasingly frustrated by the EU’s slow progress on its debt crisis, Nouriel Roubini told a Bloomberg seminar he believed a global double dip recession is imminent in advanced economies.
“I think we’re already into one in the U.S. based on the hard and soft data -- same with most of the euro zone, same with the United Kingdom.”
However, some commentators took heart from August U.S. capital goods orders, which were the strongest in three months.
One bright spot in U.S. equities was Amazon, the online retailer, which launched its US$199 Kindle Fire tablet, a low-cost competitor to the iPad, to market approval. Amazon shares were up 4.6% to US$234.62.
Elsewhere, key commodity stocks tumbled, with Dow Chemical and Alcoa each losing more than 3.6% of their value.
Gold continued its fall of recent times, down 2.81% to US1,606.10 an ounce, while Bloomberg reports that oil for November delivery on the New York Mercantile Exchange is fell 3.6% overnight to US$81.37 a barrel on concerns about weakness in Europe further infecting other major economies.
(BusinessDesk)
11 Comments
How can developed Western economies ever recover under the current economic scenario ?
Young Americans are becoming increasingly frustrated as our politicians stand by and do nothing while our economy is being hollowed out. The sad truth is that United States has lost an average of 50,000 manufacturing jobs a month since China joined the World Trade Organization in 2001, and top politicians in both major political parties keep pushing for even more job-killing "free trade" agreements.
Our governments are manoeuvring New Zealand into a hopeless economic and financial position – PM where are the decent jobs ? A society condemned to work in low wage and often unskilled jobs – while foreign, skilful workforces build our infrastructure needs in the billions using taxpayers money.
Our politicians and our business leaders have pursued economic policies that are so self-destructive that it defies explanation.
…and I’m wondering when in this blog people are realizing, talking about monetary policies and share – market issues are just daily “Small Talks” going around in a circle, which doesn’t make our financial/ economic situation much better.
People talk to the point.
Yeah - especially you, please read the article incl. links above twice, to learn and understand what is required to run an economy successfully - in the current situation - just to keep the society going.
..and in case you think this is still rubbish, and our government is right, read the article and links again to learn and understand what is really important to run an economy/ society successfully.
….well - good boy you obviously learned something and now make sure those politicians in charge, mismanaging our country are under constant pressure by the media/ NZpublic for better performances.
Who do you think should be sacked ? I have at least 4 ministers on my list.
You tell me - I got the flu too - make them accountable !!!!
No, that's your killed list Walter...your sacked list was much longer...!
For me I want to sack Banks before he gets a power hungy little foot in the door.....this man is dangerous make no mistake ...and always thinks he knows what is good for you ...without consultation.
See a spark..stomp it ..! afore it comes a fire.
.. are you shouting to me using bold in my name ?
Christov this isn’t a good argument. I think shouting relates more to the tone of the comment. The “B” function is available and bloggers are highlighting important sentences or use it as a title (headline), so moderators should not interfere with bloggers - especially with people they know.
"Our politicians and our business leaders have pursued economic policies that are so self-destructive that it defies explanation"
The explanation is one which people like to blow off with ignorant labels. At what stage does it get so bad , and so obvious, that ignorant labels become passé ?
The proposal would aim to raise US$78 billion annually and come into effect in 2014, placing a 0.1% impost on all transactions involving EU-based institutions, and a 0.01% tax on financial derivative contracts. Increase the FTT on derivatives, they are the most damaging.
78bn , how much has the FED farmed out in magic money? Oh yeah trillions. That 78bn will go a long way to solving 5/8 of FA. You can tell by the noises from the Uk that it will never be allowed to happen, not at 0.01 or any other rate you can dream up.
Were derivatives not illegal until 1999 ?
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