Each week QFINANCE will endeavor to bring you some of the biggest news stories from the past five days in finance and business, as well as some of the most fascinating websites and links that have crossed our path. As you can see, our weekly rounds-up have been moved to Thursday night and will be covering Friday to Thursday weeks instead. We hope you'll enjoy reading it and you'll come back each Thursday to brush up on your finance and business knowledge.
Friday November 25
Once again, Friday was a terrible end of the week in Europe as Hungary lost its investment-grade rating at Moody’s Investor Services after 15 years, and Italy is forced to pay record interest rates in a €10bn auction of treasury bills. The Italian interest rate of the new debts to be repaid in six month was 6.504% compared with only 3.535% in the October 26 sale. While London, Paris and Frankfurt’s benchmark indexes were all down by about 0.5% on the day, the FTSE MIB in Milan dropped 1% following the auction, to 1.9%.
Monday November 28
The week hadn’t even begun when George Osborne announced a £20bln loan scheme on Sunday, to back small businesses and boost the economy. Launched in January 2012, the scheme will be using the government’s balance sheet to endorse bank loans of companies with a turnover lower than £50m. The Chancellor told the BBC that “the government will underwrite the loans the banks make to small business in order to cut the interest rates that they pay.” With an initial budget of £20bn, Osborne said the two-year scheme could be expanded to up to £40bn.
Tuesday November 29
The Organisation of Economic Co-operation and Development’s (OECD) regular report brought even more bad news to the world’s economy. The Paris-based think-tank declared that: "Trade growth slowed strongly in most major economies in the third quarter of 2011." On the UK, the organization reported a £50bn black hole in the Chancellor’s deficit reduction program, which seems to outshine George Osborne’s Autumn Statement on the new measure to boost the economy. http://www.guardian.co.uk/business/2011/nov/30/oecd-global-recession-world-economy?newsfeed=true
Wednesday November 30
An emergency action brought the U.S. Federal Reserve, the European Central Bank, and the central banks of Japan, Britain, Canada and Switzerland together to supply cheaper dollar liquidity to European banks facing credit crunch. The central banks announced a new joint plan to calm the tensions of the financial system and help commercial banks by making dollar liquidity more accessible and cheaper. Although the euro’s sovereign debt crisis is still a heavy threat on the world’s financial stability, it seems to have settled the European markets as analysts reported a sentiment of hope.
Thursday December 01
It seems Wednesday’s collective action and its positive effects on the markets Thursday morning was not enough to contain the eurozone crisis on a larger scale. The president of the European Central Bank (ECB), Mario Draghi insisted on the increase of the “downside risks” on the eurozone economy. Mr. Draghi said the initiatives and measures to buy government debt were limited, and that further actions should be taken. Meanwhile in the UK, Bank governor Sir Mervyn King, warned the banks and insisted on the need of making “contingency plans” in case of a eurozone break-up and because of an “exceptionally threatening” environment.
Come back next Thursday for another report on the world of business and finance.
Tags: banking , corporate governance , ECB , emerging markets , European Central Bank , European Monetary Union , eurozone , financial crisis , US