Ten months into his eight-year term, the man hailed as ‘’Super Mario’’ is facing his biggest test yet.
And though the outcome of the European Central Bank’s latest meeting is by no means a given, what’s sure is his words will resonate far from the region’s shores.
Now into its third year and counting, the single currency’s funding crunch has claimed the scalps of three eurozone countries so far and threatens to engulf others which are ‘too big to bail’ but too big to fail.
What started as a financial crisis has morphed into an existential one and left ECB President Mario Draghi to fill the vacuum of leadership left by the eurozone’s squabbling politicians.
While the ECB will formally be contemplating its interest rate policy on Thursday, Draghi’s most pressing task will be far less mundane: instead investors are relying on him to keep the next troubled members solvent, even if that means creating an artificial market for their debt.
London (CNN) – Flicking through Barclays’ 286-page annual report, it’s impossible to avoid a grinning former CEO Bob Diamond – once branded "the unacceptable face of banking" - making a range of pronouncements, which in the wake of the Libor rate fixing scandal now sound profoundly hollow.
Take this old chestnut from Diamond, much touted since banks were caught on the back foot during the 2008 credit crunch: "Banks need to become better citizens."
Or listen to this snippet: "When we’re at our best, we serve the real economy by doing our best for all our stakeholders: our customers and clients, the communities we serve, our people and our shareholders."
London (CNN) - Fresh from the frying pan and about to leap into the fire, former Barclays boss Bob Diamond faces a UK parliamentary committee today to answer questions on a rate fixing scandal that cost his bank $450 million and Diamond his job.
Diamond resigned yesterday - alongside COO Jerry del Messier – saying “the external pressure placed on Barclays has reached a level that risks damaging the franchise.”
A memo published by Diamond ahead of his testimony today appears to point the finger at senior central bankers and politicians, suggesting Barclays was encouraged to lower the rate known colloquially as ‘LIBOR.’
David Ruffley, a Conservative member of parliament for Bury St Edmunds, is one of 13 lawmakers from a cross-party panel which will grill Diamond later today.
World Business Today spoke to Ruffley about the questions lawmakers want answers to. FULL POST
London (CNN) – Eurobonds will be back on the agenda at the euro crisis summit later this week, with one source telling me there will be “more than twenty different types” under discussion.
Such bonds - a way to raise cash backed by all 17 eurozone countries – have long been floated as one panacea to the bloc's financial crisis but the idea has been stymied by political resistance, largely from German chancellor Angela Merkel.
But as the crisis continues to rumble on the introduction of eurobonds looks increasingly likely. And the ascendancy of eurobond advocate Francois Hollande, France’s new president, has thrown weight behind the idea.
London (CNN) – Controversial and caddish to some, funny and forthright to others, former Italian Prime Minister Silvio Berlusconi is arguably the most high profile scalp claimed by the eurozone crisis so far.
Whether it was the ‘Bunga Bunga’ scandal or the unbalanced budgets that booted the former cruise-ship crooner out of office remains a point of discussion.
One thing you can’t argue with however is that eurozone membership has robbed Italy of its traditional tool for tackling boom and bust cycles: The currency devaluation.
Cue Berlusconi, who Italians often call "Il Cavaliere." “Leaving the euro is not blasphemy…” writes the 75-year old on his Facebook page.
"What would happen if Italy, Spain or Greece went back to their old currencies? I don't know, maybe there would be a loss of wealth but I don't understand why," Berlusconi later told Italian news agencies.
(CNN) - If recent history is anything to go by, the number 7 has good reason to be feared in the European bond markets.
Once yields on Greek, Irish and Portuguese 10-year notes hit that unlucky figure, they didn’t come back down - pricing three eurozone members out of the markets in quick succession and into bailout limbo.
Though it may be arbitrary, 7 could soon become the cut off point for a new two-tier common currency; an area where peripheral members pay the high price for low growth and lack of reform, whilst the more buoyant economies of the north enjoy record-low borrowing rates.
That is unless someone can convince the German Chancellor that so called jointly-issued “eurobonds” really are the panacea. FULL POST
Athens (CNN) - Greece has voted. New Democracy, its pro-bailout party, prevailed in Sunday’s election and still market reaction has been decidedly muted. Much like last week’s market performance following Spain’s aid request, the euphoria fizzled quickly as traders focused instead on the considerable unknowns looming in the distance.
Among the unanswered questions: Will Greece’s New Democracy party be able to form a government? And how much leeway will it have to soften the terms of its Troika-prescribed austerity package?
Writing to clients today, HSBC economists David Bloom and Janet Henry said Greece’s result may offer temporary relief but warned that “major challenges remain.”
“While a coalition of pro-bailout parties would put the idea of a Greek euro exit on the back burner for now, it would not alter the underlying problems in the euro zone itself,” they added. FULL POST
London (CNN) – For London’s investment community Sundays are more about talking pizzas than politics.
They’re the last chance to unwind before buckling up for the bumpy ride when the markets open on Monday morning.
But across Europe’s financial hub, traders are keeping an uneasy eye on events in Athens and preparing themselves for what many reckon will be a wild week at work.
The 43 year-old Dutchman shot to fame three years ago at the height of the credit crunch as the forthright financier on the BBC’s reality show "Million Dollar Traders."
Van Dam now spends his time running Hampstead Capital, a fund with 500 million euros ($630 million) under management, as well as his new initiative: The Lex van Dam Trading Academy, set up to teach would-be dealers how to manage money.
He took time away from his weekend lunch (and 26,000 followers on twitter) to answer five key questions on what the Greek elections mean for the markets.
1. Will Greece leave the euro?
Yes. They will leave very soon unless the Germans change their tune and throw more money at them. It is slightly unfair though as most of the help Europe gives them is to help the Europeans themselves as opposed to helping the Greek people.
2. Is austerity the right answer?
Austerity is not the answer. The Greek economy is absolutely collapsing and the tax base is going down with it. The American and British solution of printing money is not the answer because it will lead to a total lack of trust in the government because paper money will be worthless. The answer is accepting that people in the West need to work harder and longer.
3. Will the euro survive?
The biggest chance is for a two-speed Europe to emerge with Germany leading the euro pact and Italy in the second group. The German euro will be very strong, the Italian euro very weak though.
4. Eurobonds: The perfect cure or recipe for disaster?
The Germans have done a massive amount of austerity at home with a higher retirement age and lower wage inflation than in the southern European nations. They will not write a blank cheque to the south. Eurobonds mean that the Germans will become responsible for the Greek debt. It will not happen unless countries such as Spain and Italy give up part of their sovereignty.
5. Where are you putting your money now?
My money stays in cash and real assets such as property and gold. Shares are not expensive right now but if interest rates go up even a little they could drop a lot.
With a deficit more than 4 times the European Union limit and an economy mired in a deep recession, Greece hurtled towards insolvency.
Then-Prime Minister George Papandreou assured the world Greece was determined to confront its fiscal problem.
“We are making deep changes in our economy, our political system, our society, building the conditions for a stable economic environment, a transparent economy, a viable economy,” he said.
But those promises proved futile. FULL POST
Madrid (CNN) – Spain: a country home to 47 million people and a $1.4 trillion economy. The Spanish bull has stood proud on Iberian hilltops for years, a symbol of force and a fitting tribute to a country which up until recently was the euro zone's fourth richest.
But step out of the Castilian plain and onto the bustling streets of Madrid – or any other Spanish city for that matter - and the skyline tells a different story.
The horizon is dotted with relics from the country's now burst property bubble.
Empty apartment blocks stand idle in the suburbs, while downtown the glass towers of Spain's financial district cast shadows over the people below and a shadow over their children's future.
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