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Controversial Cyprus Proposal Brings Euro Crisis Back Into Focus

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Photo Credit: Images_of_Money

A controversial bailout proposal and bank depositor levy for Cyprus brought the euro-zone’s debt crisis back into focus Monday, causing bond yields to leap, the euro to initially sink against the dollar and Europe’s bank shares to plunge.

News over the weekend spooked the market, after a 10 billion euro ($13 billion) bailout for Cyprus included an unpopular levy on all deposits in the island’s banks.

If the proposal is passed by parliament–Cypriot lawmakers are expected to vote today–this would mark the first time such a strategy has been implemented during the five-year euro-zone crisis.

The European currency was initially hit hard, falling to a three-month low of $1.2882 and the yen resumed its role as a safe-haven asset as it strengthened against the dollar. However the euro started to pare losses one hour into the European session as did other areas of the financial spectrum.

Italian and Spanish bond yields at first climbed sharply and then eased; by 0900 GMT Italy’s 10-year government bond yield was 0.08 percentage points higher at 4.68% and Spain’s bond yielded 5.03% up by 0.13 percentage points, its highest level in 10 days. The Cypriot bailout deal could put the spotlight on Spain’s bond auction, due later in the week.

Read more from this story HERE.

Currency Wars: Why Is The French Industry Minister Rooting For The Devaluation Of The Euro

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Photo Credit: The BlazeFollowing his embarrassing brush with U.S. CEO Maurice Taylor, French Industry Minister Arnaud Montebourg has turned to the devaluation of the euro as a means of saving France’s battered economy.

No, really.

“France’s industry minister Tuesday called for a lower euro and said the European Central Bank’s [ECB] role should be reinterpreted, wading back into a currency debate that had been calmed by an agreement between the world’s top finance ministers earlier in the month to refrain from competitive devaluations of their currencies,” the Wall Street Journal reports.

“I am for a less-strong euro,” Montebourg said Tuesday, adding that it is “good news” the euro has declined against other currencies.

As noted in the WSJ report, the euro has fallen about 4.6 percent against the U.S. dollar since February:

“I am very happy, [the decline] should continue,” Montebourg added.

The report continues:

Earlier this year, French officials complained about the euro being too strong and making the country’s exports less competitive. In a speech to the EU parliament in early February, French President Francois Hollande said the euro shouldn’t be left to fluctuate according to the mood of the markets and warned that a strong euro wipes out efforts to make economies more competitive.

Read more from this story HERE.

Italy Halts Austerity Plan Leaving EU In Turmoil

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Photo Credit: Max RossiThree years of German-led austerity and budget cuts aimed at saving the euro and retooling the European economy was left facing one of its biggest challenges as Italian voters’ rejection of spending cuts and tax rises opened up a stark new fissure in European politics.

The governing stalemate in Rome and the vote in the general election – by a factor of three to two – against the austerity policies pursued by Italy’s humiliated caretaker prime minister, Mario Monti, meant that the spending cuts and tax rises dictated by the eurozone would grind to a halt, risking a re-eruption of the euro crisis after six months of relative stability.

Fears that the deadlock will lengthen Italy’s near two-year recession and spill over into the rest of the eurozone hit markets across Europe. The Italian banking sector fell 7% in value, dragging the main MIB stock market index 4% lower.

The market turmoil in Milan spread to Germany, France and the UK, with domestic banks among the biggest fallers. Deutsche Bank saw almost 5% knocked off its value, while Barclays suffered a 4% decline. The FTSE 100 fell 1.4%. The German Dax slumped more than 2% and the Paris Cac was down 2.75%.

The cliffhanger vote saw the maverick comedian Beppe Grillo’s 5 Star movement take almost one in four of the votes and the political revival of the ex-prime minister Silvio Berlusconi. But the narrow victor, Pier Luigi Bersani, on the centre-left, claimed the mantle of the premiership, although it was unclear if he would be able to form a government.

Read more from this story HERE.

Merkel: Euro Crisis Will Last at Least Another 5 Years; Shipments of Life-Saving Drugs to Greece Halted

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Merkel: Euro Debt Crisis to Last at Least Five More Years

By Associated Press. German Chancellor Angela Merkel says Europe’s sovereign debt crisis will last at least five more years.

Merkel says the continent is on the right path to overcome the crisis but “whoever thinks this can be fixed in one or two years is wrong.”

Two years ago some heavily indebted European countries were dragged into the turmoil that first gripped global financial markets in 2007.

Greece in particular has been struggling with the austerity conditions imposed on it by countries such as Germany. Read more from this story HERE.

Germans stop shipment of life-saving cancer drug to Greece as Euro crisis deepens

By the Daily Mail Reporter. The spiralling decline of the Greek economy took an even more brutal turn today with the news that German pharmaceuticals firm Merck KGaA has ceased deliveries of a life-saving cancer drug to Greek hospitals.

The drug, Erbitux, is an effective treatment for both colorectal cancers and head and neck cancers

A number of industrial giants have shied away from accepting orders from the crisis-hit Greeks.

Another German-based pharma giant, Biotest, suspended shipments to Greece because of unpaid bills in in June of this year.

Matthias Zachert, Merck’s chief financial officer, told the German newspaper paper Boersen-Zeitung that publicly-owned hospitals in several euro-zone countries had been struggling to pay their bills. Read more from this story HERE.