Forget too-big-to-fail, new concern is that many banks are too-weak-to-survive

Firms with over $11 trillion in assets would remain troubled even if interest rates rise, IMF says in new report

A third of biggest banks in the world’s richest countries are so weak their problems could not be solved even by a recovery and rising interest rates, the International Monetary Fund said in a new report released Wednesday.

About a third of European banks, with $8.5 trillion in assets, and a quarter of U.S. banks, with $3.2 trillion in assets, are in this too-weak-to-recover category, the IMF said.

The Euro Does Not Have A Problem… It Is The Problem

Everyone says Germany is the main benefactor in all of this, but they continue to miss the bigger picture: All roads lead to Berlin as the Euro was designed to fail. It is devouring the continent and won’t stop at Greece. In no particular order, after Greece comes Italy, Spain and France. The German-dominated EU might be able to withstand a Greek collapse, but will not any one of the three mentioned or all combined.

 

Europe’s leaders must face the truth that the single currency now poses fundamental threat to global financial stability

There will be a temptation to gloat over the Greek crisis over the next week and a queue of people waiting to say “I told you so”. Both would be unwise.

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In the six years from 2004, Greek output increased in nominal terms by 40 per cent, while government spending rose by 87 per cent and tax revenues rose by a mere 31 per cent.

The European authorities charged with overseeing the single currency should have acted then. Their failure to do so has been partly to blame for today’s crisis.

Predictors of 1929 crash see 65% chance of 2015 recession

In 1929, a businessman and economist by the name of Jerome Levy didn’t like what he saw in his analysis of corporate profits. He sold his stocks before the October crash.

Almost eight decades later, the consultancy company that bears his name declared “the next recession will be caused by the deflating housing bubble.” By February 2007, it predicted problems in the subprime-mortgage market would spread “to virtually all financial markets.” In October 2007, it saw imminent recession – the slump began two months later.

The Jerome Levy Forecasting Center, based in Mount Kisco, New York, and run by Jerome’s grandson David, is again more worried than its peers. Its half-dozen analysts attach a 65 percent probability of a worldwide recession forcing a contraction in the US by the end of next year.

Exclusive – BRICS nations monitoring ‘complex’ global markets – source

(Reuters) – Major emerging-market economies are paying close attention to “new and complex” developments in global financial markets and want closer coordination of their macroeconomic policies, a diplomatic source briefed on the matter told Reuters on Monday.

Brazilian President Dilma Rousseff and her Chinese counterpart, Xi Jinping, discussed ways to strengthen policy coordination on Monday in a telephone conversation, said the official, who asked not to be identified.