by Berny on September 9, 2011

DAVOS/SWITZERLAND, 24JAN08 - Jean-Claude Trich...

Image via Wikipedia


World financial markets have been thrown into fresh turmoil after the abrupt  resignation of Germany’s member of the European Central Bank’s board exposed the  deepening divisions over the bank’s handing of the eurozone debt crisis.

Jürgen  Stark’s decision to quit highlighted the board’s disagreements over the  ECB’s purchases of government debt, which were broadened last month to include  Italian and Spanish bonds, and heightened German alarm at the expansion of the  ECB’s responsibilities beyond its traditional inflation-fighting role.

His resignation comes at a crucial time for Europe’s monetary union, with an  attempt to involve private sector creditors in a bail-out of Greece fuelling  worries that the eurozone’s weakest member is on the brink of default. Our FREE CD presented via the link on this blog under HOW TO PROSPER IN THE DOUBLE DIP becomes historic for you and those you share that information with – now critical as wave after wave of financial stress hits your futures. Are you taking action? Are you taking the right action. For adults alive today the conference we present at on HOW TO PROSPER IN THE DOUBLE DIP is the first event in he world – uniting leading Fortune consultants – into a curriculum on what to DO to really come out well inside the developing double dip recession market space. If you wish to invest in insurance for your lifestyle given all the news you are studying – consider investing in the critical information to come out on top.

The euro slid to the lowest level in six months against the dollar, and ‘safe  haven’ bond yields plumbed fresh lows as news of Mr Stark’s resignation and  Greek default rumours spread. The FTSE All-World index fell as much as 3.07 per  cent, while Greek 10-year bond yields surged to yet another record, to more than  19.5 per cent.

Yields on the 10-year German Bund fell to a record low of 1.77 per cent. The  yield on equivalent US debt also fell to 1.91 per cent in New York trading, the  lowest in six decades, while 10-year UK gilt yields declined 9 basis points to  2.26 per cent.

“Rates can be lower than you’d imagine for longer than you’d think,” said Kit  Juckes, currency analyst at Société Générale. “But you wouldn’t expect the kind  of things we’ve seen in [European] rates unless you’re thinking something  terrible will happen.”

The resignation of Mr Stark, who was a vociferous monetary hawk, presents a  huge political dilemma for Angela Merkel, Germany’s chancellor, just as she is  seeking to persuade her restive Christian Democrat supporters to increase  Germany’s financial guarantees for its eurozone partners.

“It could scarcely have come at a worse time for the chancellor,” according  to one political observer in Berlin. “She will have to make a very strong and  convincing statement” to gain the support of her backbenchers.

Finance ministers and central bank governors of the G7 advanced economies  meeting in Marseilles did not come up with any new plans to solve the crisis in  Europe, but they emerged late on Friday night to express concern at the turmoil  and pledged to do whatever is necessary in coming weeks to calm nerves in the  eurozone.

Mr Stark was seen by many German conservatives as the one man holding the  line at the ECB. Kurt Lauk, president of the ruling Christian Democratic Union’s  business advisory council, said Mr Stark’s resignation was “a dramatic alarm  signal” for the ECB to be “brought back on to the right path”.

He had opposed the ECB’s bond buying programme since its launch last May – but up until Friday had remained loyal to Jean-Claude Trichet, ECB president. In  a statement,  the ECB cited “personal reasons” for his departure but those familiar with his  thinking cited his wide-ranging worries about steps being taken by the ECB and  other central banks globally. He had been considering his departure for some  weeks – and timed it to allow a successor to be in place by the end of the year,  shortly after Italy’s Mario Draghi takes over from Mr Trichet on November 1.

It is the second high-level German departure this year from the ECB’s  governing council, on which Mr Stark sits as well its six-man executive board.  In February, Axel  Weber resigned as Bundesbank president after disagreeing strongly with the  ECB’s strategy.

The seeds of the EU breaking up – can pin point their fertile soil in this weekend’s news.

The contagion to markets everywhere will predictably follow. While we have suggested you prepare for these unfolding events we realize fully as each financial storm hits shore it is jarring …we have suggested joining conscious entrepreneurs from across the world September 27th in Las Vegas in the only symposium ( a tax deduction ) on the step by step safe harbor HOW TO PROSPER IN THE DOUBLE DIP RECESSION – bleeding edge material to help leaders take action in their own cicumstances – ideal for CEO’s – professionals – investors and forward thinking planners – and retirees. Join us if your tired of reading and want to DO SOMETHING POSITIVE in the middle of all this …


Berny Dohrmann – Chairman

Enhanced by Zemanta

Comments on this entry are closed.

Previous post:

Next post: