The World Is Defenceless Against The Next Financial Crisis, Warns BIS (Telegraph)
The world will be unable to fight the next global financial crash as central banks have used up their ammunition trying to tackle the last crises, the Bank of International Settlements has warned. The so-called central bank of central banks launched a scatching critique of global monetary policy in its annual report. The BIS claimed that central banks have backed themselves into a corner after repeatedly cutting interest rates to shore up their economies. These low interest rates have in turn fuelled economic booms, encouraging excessive risk taking. Booms have then turned to busts, which policymakers have responded to with even lower rates.
Claudio Borio, head of the organisation’s monetary and economic department, said: “Persistent exceptionally low rates reflect the central banks’ and market participants’ response to the unusually weak post-crisis recovery as they fumble in the dark in search of new certainties.” “Rather than just reflecting the current weakness, they may in part have contributed to it by fuelling costly financial booms and busts and delaying adjustment. The result is too much debt, too little growth and too low interest rates. “In short, low rates beget lower rates.” The BIS warned that interest rates have now been so low for so long that central banks are unequipped to fight the next crises. “In some jurisdictions, monetary policy is already testing its outer limits, to the point of stretching the boundaries of the unthinkable,” the BIS said.....
more: http://www.telegraph.co.uk/finance/econ ... s-BIS.html
Governor: Puerto Rico near 'death spiral':
Puerto Rico can no longer make payments on its $73 billion in debt, according to Governor Alejandro Garcia Padilla, who warns the island is perilously close to entering a "death spiral"....
http://money.cnn.com/2015/06/29/news/ec ... oplead-dom
One flashpoint is a $400 million debt payment that government-run electricity provider, PREPA, must make on July 1. It's a debt that PREPA almost certainly can't pay in total -- Moody's has rated the electricity company's bonds in the lowest possible category.
PREPA itself has about $9 billion in total debt -- by comparison, when Detroit went into bankruptcy, it shed $7 billion.
Things have gotten so bad that Puerto Ricans of all social classes have left in search of jobs elsewhere.
Between 1980 and 2000, the average annual migration of Puerto Ricans to the mainland United States was 12,000 people. From 2010 to 2013 -- when the economy started tanking -- that figure jumped to 48,000 people per year.
Every time someone leaves Puerto Rico, it only exacerbates the situation. It shrinks the island's tax base, which the government needs to pay for itself and its debts. In recent years, the government just issued even more debt to pay off its current debt.
Greece Will Default To IMF Tomorrow, Government Official Says
http://www.zerohedge.com/news/2015-06-29/greece-will-default-imf-tomorrow-government-official-says
Sixstrings wrote:It's official, Greece will default tomorrow:Greece Will Default To IMF Tomorrow, Government Official Says
http://www.zerohedge.com/news/2015-06-29/greece-will-default-imf-tomorrow-government-official-says
Greek Capital ControlsBanks closed up to and including July 6
Wages and pensions will be paid
Daily ATM withdrawal limit of 60 euros ($67; £42)
No restriction on foreign tourists using ATMs
Electronic transactions unaffected: Greek debit/credit cards can be used
History shows capital controls usually don't work
But government insists deposits are safe
Fishman wrote:Enjoying the popcorn as we watch the Thacher's quote play out, 'The problem with socialism is that you eventually run out of other people's money.' Looks like France is in dire straits also
americandream wrote:Thatcher .... Reagan....blah blah blah
Greece threatens top court action to block Grexit
Greece has threatened to seek a court injunction against the EU institutions, both to block the country's expulsion from the euro and to halt asphyxiation of the banking system.
“The Greek government will make use of all our legal rights,” said the finance minister, Yanis Varoufakis.
“We are taking advice and will certainly consider an injunction at the European Court of Justice. The EU treaties make no provision for euro exit and we refuse to accept it. Our membership is not negotiable,“ he told the Telegraph.
http://www.telegraph.co.uk/finance/economics/11707092/Greece-threatens-top-court-action-to-block-Grexit.html
Sixstrings wrote:I guess they want to default, but keep the euro?
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