
The title of this blog echoes the title of a speech given on 1 June by Benoît Coeuré, a member of the Executive Board of the European Central Bank. The first thing that comes to mind when one sees a title like this is a sense that this truly would seem to be mission impossible at the current time. The only magic wand that anyone could wave over the current mess would be a sudden pledge from the ECB to buy as much sovereign debt as was needed to calm markets. This wouldn't cure anything, but it would "restore confidence", at least for a while. If it was allied to a sudden urge by all members of the eurozone to meld together into a fiscal union, then the magic trick would be complete. However this latter point is right up there with "pigs might fly".

With Standard Chartered, one of the few major banking names to emerge with its reputation unscathed from the 2008 crash and the LIBOR debacle, now looking as besmirched as the rest, this is not a good moment for bankers to be complaining about "over-regulation." However, there is a widespread view among bankers that the biggest risks facing the sector going forward are the unintended consequences that are likely to flow from regulatory initiatives like Basel III and political initiatives to curb pay and bonus excesses. No surprises there, of course: after the party comes the clean up, and who enjoys that?

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Out-of-court settlements, such as the one involving Standard Chartered announced yesterday, do little to alter bankers' behavior or to put the global financial system on sounder footing -- and may even promote financial crime.

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In the wake of the recent spate in scandals involving British banks, the UK’s Serious Fraud Office (SFO) is now predictably making all the right noises about prosecuting miscreant bankers. Yet legal experts on both sides of the Atlantic argue that the SFO is too weak to live up to its promises; and say that the more aggressive US system could be a far likelier source of prosecutions.

Each week QFINANCE.com brings you some of the biggest news stories from the past five days in finance and business – essential reading to keep you up to date with latest topics.

The IMF's job, in its Article IV country reports, is to fact find, then tell things like they are with a view to making recommendations to promote financial stability and growth. That being the case, its latest report on the European Union was never going to be pretty. The facts are too stark for that. Unfortunately the IMF's mission this go round runs directly counter to the desperate efforts of Europe's politicians to put a positive gloss on the unholy mess that the EU has become. Simply telling things "as they are" in the eurozone context is much like approaching a car that is teetering nose first on the edge of a cliff, seizing the back bumper and lifting and pushing instead of pulling.

The reputation of banks has sunk so low in recent weeks, one wonders if it can plummet any further. On June 27 the the Libor rigging scandal erupted when Barclays became the first of many global banks to reach a settlement with the US and UK authorities. In the ensuing days, the bank went into reputational meltdown and, so far, four directors including chief executive Bob Diamond fell on their swords.

In its latest reports on US and European high yield corporate debt, the ratings agency Fitch flagged up the fact that the trailing 12-month default rate on this asset class rose above 2% for the first time since October 2010, hitting 2.2%. However, the high yield space continues to provide very attractive returns for investors and Fitch says that the default level remains on track to be between 2.5% and 3% by the end of 2012, despite increasingly difficult trading conditions.
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