UFO Wiki - User contributions [en]

User:HarrelsonKayser611

2013-01-16T09:36:25Z

2.121.67.96: Created page with "Bank of America has reported a $2bn (�1.2bn) profit for the three months to the end of 2011, compared with a $1.2bn loss in the same period in 2010. It signals continued recov..."

Bank of America has reported a $2bn (�1.2bn) profit for the three months to the end of 2011, compared with a $1.2bn loss in the same period in 2010.

It signals continued recovery for the US' second biggest lender.

For the full year, the company reported net profits of $1.4bn compared with a net loss of $2.2bn in 2010.

Meanwhile Morgan Stanley, the world's largest broker, reported a fourth-quarter loss of $250m compared with a profit of $836m a year earlier.

Despite the loss, the results at Morgan Stanley beat analysts' expectations since it was able to increase its share of the equity trading market in the period.

For the full year, Morgan Stanley said its net revenues were $32.4bn compared with $31.4bn in 2010.

Recent results from American banks have been mixed with Goldman Sachs announcing on Wednesday that it made 47% less in profits than in 2010 whilst Citigroup posted a 6% rise on the previous year.

Bank of America chief executive Brian Moynihan said: "We enter 2012 stronger and more efficient after two years of simplifying and streamlining our company."

"Reflecting a gradually improving economy," continued Mr Moynihan, "we saw solid business activity by companies of all sizes, with commercial and industrial loan balances rising."

Bank of America was one of the worst performers on Dow Jones Industrial Average index of leading companies in 2011, losing 58% of its share value over the year.

The lender has been hit by lingering concerns about bad mortgage loans on its books in the wake of the 2008 sub-prime crisis when it was bailed out by the US government.

The bank has been building up its reserves, known as Tier 1 capital, to protect itself against the risk of further bad loans.

"Our fourth-quarter results reflect the aggressive steps we have been taking to strengthen the balance sheet and position the company for long-term growth," said chief financial officer Bruce Thompson in a statement.

"During the quarter, we significantly increased capital and liquidity. For 2012, our focus is to continue to build capital and liquidity and manage expenses."

User:EstellaMalek903

2013-01-16T07:09:50Z

2.121.67.96: Created page with "Italy has moved to centre stage in the eurozone debt crisis. While Greece generated a lot of noise, it is now seen as a sideshow. Greece's debt problems are already widely know..."

Italy has moved to centre stage in the eurozone debt crisis.

While Greece generated a lot of noise, it is now seen as a sideshow.

Greece's debt problems are already widely known and the immediate consequences of a Greek default largely anticipated.

Moreover, the size of the Greek economy is small enough that the direct damage, if Greece stopped paying its debts, should be quite manageable for the eurozone.

Instead, the big fear is "contagion" - that a Greek default could trigger a financial catastrophe for other, much bigger economies - in particular Italy and Spain.

And it seems it is Italy that is now seen as the lead candidate for that contagion. But why is this?
Prudent Italy?

According to Germany's Chancellor, Angela Merkel, "Italy has great economic strength, but Italy does also have a very high level of debt and that has to be reduced in a credible way in the years ahead."

As with Greece, she and other eurozone leaders believe the solution is more government austerity - spending cuts and tax rises - by Rome.

However, some economists might disagree with her assessment.

The Italian government's debt, at 118% of GDP (annual economic output) is certainly high, even by European standards.

But dig a little deeper, and the picture changes.

Unlike their counterparts in Spain or the Irish Republic, ordinary Italians have not run up huge mortgages, and generally have very little debt.

That means that according to the Bank of International Settlements Italy as a country - not just a government - is not actually terribly indebted compared with other big economies such as France, Canada or the UK.
Continue reading the main story
Crisis jargon buster
Use the dropdown for easy-to-understand explanations of key financial terms:
GDP
GDP
Gross domestic product. A measure of economic activity in a country, namely of all the services and goods produced in a year. There are three main ways of calculating GDP - through output, through income and through expenditure.
Glossary in full

Moreover, the large debts of the Italian government are nothing new. It has got by just fine with a debt ratio over 100% of its GDP ever since 1991.

User:VivienSomers253s

2013-01-16T03:00:45Z

2.121.67.96: Created page with "What really caused the eurozone crisis? World leaders probably spent more time worrying about the eurozone crisis than anything else in 2011. And that was in the year that feat..."

What really caused the eurozone crisis?

World leaders probably spent more time worrying about the eurozone crisis than anything else in 2011.

And that was in the year that featured the Arab Spring, the Japanese tsunami and the death of Osama Bin Laden. What's more, 2012 looks set to be not much different. But as eurozone governments hammer out new rules to limit their borrowing, are they missing the point of the crisis?

* The eurozone has agreed a new "fiscal compact"
* Eurozone leaders have agreed to a tough set of rules - insisted on by Germany - that will limit their governments' "structural" borrowing (that is, excluding any extra borrowing due to a recession) to just 0.5% of their economies' output each year. It will also limit their total borrowing to 3%. These rules are supposed to stop them accumulating too much debt, and make sure there won't be another financial crisis.
* But didn't they already agree to this back in the '90s?
* Hang on a minute. They agreed to exactly the same 3% borrowing limit back in 1997, when the euro was being set up. The "stability and growth pact" was insisted on by German finance minister Theo Waigel (centre of image). What happened?
* So who kept to the rules?
* Italy was the worst offender. It regularly broke the 3% annual borrowing limit. But actually Germany - along with Italy - was the first big country to break the 3% rule. After that, France followed. Of the big economies, only Spain kept its nose clean until the 2008 financial crisis; the Madrid government stayed within the 3% limit every year from the euro's creation in 1999 until 2007. Not only that - of the four, Spain's government also has the smallest debts relative to the size of its economy. Greece, by the way, is in a class of its own. It never stuck to the 3% target, but manipulated its borrowing statistics to look good, which allowed it to get into the euro in the first place. Its waywardness was uncovered two years ago.
* 3/9 Italy
Worst offender
* 5/9 Germany
First to break rules
* 6/9 France
Offender
* 9/9 Spain
Top of the Class
* But the markets have other ideas
* So surely Germany, France and Italy should be in trouble with all that reckless borrowing, while Spain should be reaping the rewards of its virtue? Well, no. Actually Germany is the "safe haven" - markets have been willing to lend to it at historically low interest rates since the crisis began. Spain on the other hand is seen by markets as almost as risky as Italy. So what gives?
* So what really caused the crisis?
* There was a big build-up of debts in Spain and Italy before 2008, but it had nothing to do with governments. Instead it was the private sector - companies and mortgage borrowers - who were taking out loans. Interest rates had fallen to unprecedented lows in southern European countries when they joined the euro. And that encouraged a debt-fuelled boom.
* Good news for Germany...
* All that debt helped finance more and more imports by Spain, Italy and even France. Meanwhile, Germany became an export power-house after the eurozone was set up in 1999, selling far more to the rest of the world (including southern Europeans) than it was buying as imports. That meant Germany was earning a lot of surplus cash on its exports. And guess what - most of that cash ended up being lent to southern Europe.
* ...bad news for southern Europe
* But debts are only part of the problem in Italy and Spain. During the boom years, wages rose and rose in the south (and in France). But German unions agreed to hold their wages steady. So Italian and Spanish workers now face a huge competitive price disadvantage. Indeed, this loss of competitiveness is the main reason why southern Europeans have been finding it so much harder to export than Germany.
* ...and a nasty dilemma
* So to recap, government borrowing - which has ballooned since the 2008 global financial crisis - had very little to do with creating the current eurozone crisis in the first place, especially in Spain (Greece's government is the big exception here). So even if governments don't break the borrowing rules this time, that won't necessarily stop a similar crisis from happening all over again.

Spain and Italy are now facing nasty recessions, because no-one wants to spend. Companies and mortgage borrowers are too busy repaying their debts to spend more. Exports are uncompetitive. And now governments - whose borrowing has exploded since the 2008 financial crisis savaged their economies - have agreed to drastically cut their spending back as well. But...
* Cut spending...
* ...and you are pretty sure to deepen the recession. That probably means even more unemployment (already over 20% in Spain), which may push wages down to more competitive levels - though history suggests this is very hard to do. Even so, lower wages will just make people's debts even harder to repay, meaning they are likely to cut their own spending even more, or stop repaying their debts. And lower wages may not even lead to a quick rise in exports, if all of your European export markets are in recession too. In any case, you can probably expect more strikes and protests, and more nervousness in financial markets about whether you really will stay in the euro.
* Don't cut spending...
* ...and you risk a financial collapse. The amount you borrow each year has exploded since 2008 due to economic stagnation and high unemployment. But your economy looks to be chronically uncompetitive within the euro. So markets are liable to lose confidence in you - they may fear your economy is simply too weak to support your ballooning debtload. Meanwhile, other European governments may not have enough money to bail you out, and the European Central Bank says its mandate doesn't allow it to. And if they won't lend to you, why would anyone else?