ECB warns Euro survival at risk - money flies out of Spain

BRUSSELS — The European Central Bank stepped up pressure on Thursday for a joint guarantee for bank deposits across the euro zone, saying Europe needed new tools to fight bank runs as the bloc's debt crisis drives investors to flee risk.

The European Commission's top economic official, Olli Rehn, warned that the single currency area could disintegrate without stronger crisis-fighting mechanisms and tough fiscal discipline.

The twin warnings came as worries about Spain's banks and Greece's survival in the euro area pushed the euro to a two-year low against the dollar and hastened a rush into safe-haven assets such as Austrian and French bonds, whose 10-year yields hit a euro-era low.

Spaniards alarmed by the dire state of their banks moved more money abroad in March faster than at any time since records began in 1990, official figures showed.

The 66.2 billion euros ($82.0 billion) net capital flight occurred before the nationalisation of Spain's fourth biggest lender, Bankia <B KIA.M>, in May due to massive losses from a burst property bubble.

http://www.msnbc.msn.com/id/47630518/ns/business-world_business/#.T8ez60VYtIm

MADRID (Reuters) - Spaniards alarmed by the dire state of their banks are squirreling money abroad at the fastest rate since records began, figures showed on Thursday, and the credit ratings of eight regions were cut.

Spain is the next country in the firing line of the euro zone's debt crisis, with spendthrift regions and shaky banks threatening to blow a hole in state finances and pushing funding costs towards levels that signal the need for a bailout.

The European Commission gave new help on Wednesday, offering direct aid from a euro zone rescue fund to recapitalize Spanish banks and more time for Madrid to reduce its budget deficit.

That helped lower the risk premium investors demand to hold Spanish 10-year debt rather than the German benchmark on Thursday, but it remained close to the euro-era record, at 520 basis points.

Bank of Spain data showed a net 66.2 billion euros ($82.0 billion) was sent abroad last month, the most since records began in 1990. The figure compares to a 5.4 billion net entry of funds during the same month one year ago.

http://www.cnbc.com/id/47629742

Euro in free fall - breaks 1.24

http://www.reuters.com/article/2012/05/30/markets-forex-idUSL1E8GU26H20120530

* Euro heads towards low $1.20s on Spain worries
    * Spanish debt yields near dangerous levels, risk of bailout
growing
    * Italian borrowing costs soar at bond sale

http://www.bloomberg.com/news/2012-05-29/euro-slides-toward-2-year-low-amid-concern-over-spanish-banks.html

The euro fell to the lowest in almost two years against the dollar as Spain struggled to rescue its troubled banks, adding to signs the European debt crisis is spreading to the region’s larger economies.

The 17-nation currency slid for a seventh day versus the yen, the longest losing streak in four months, after Italy sold less than its maximum target at a debt auction. The yen and dollar strengthened as investors sought safer assets after a European report showed economic confidence dropped more than economists estimated in May. Asian currencies weakened, pushing the Bloomberg-JPMorgan Asia Dollar Index to the lowest level since September 2010.

FX to remain unscathed by Euro collapse

Analysis by US based Greenwich Associates into foreign exchange data from the past 13 years leads it to conclude that FX markets will survive any Greek exit from the euro relatively unscathed.

Emergency European measures continue

GREECE OUT 'JUNE 18'...Cameron in contingency talks...Greece Pours Billions Into Biggest Banks...Companies Plan for Unrest...GERMANY: Not willing 'to pour money into a bottomless pit'... Spain's Debt Costs Near Danger Level...Dollar Rises...

EURUSD breaks key 1.25 level, bounces back above

http://www.smh.com.au/business/markets/euro-hit-by-spain-woes-facebook-drops-20120530-1zhvo.html The euro neared a two-year low on Tuesday as investors fretted about Spain's troubled banking system.

Already down sharply by midday, the euro fell further below $US1.25 after Egan-Jones Ratings cut Spain's credit score for the third time in less than a month, saying the need to support Spanish banks was putting new strains on public finances.

Read more: http://www.smh.com.au/business/markets/euro-hit-by-spain-woes-facebook-drops-20120530-1zhvo.html#ixzz1wIHeMiEP

Market prepares for Greek exit of Euro

http://www.bbc.co.uk/news/business-18233033 The premium for Spain's 10-year bond over its German equivalent rose to 5.05 percentage points, the highest since the euro was formed..

The slow and silent run on banks in Italy and Spain - and Greece, of course - is a reality, according to bankers and regulators, although not yet a lethal one...   http://www.bbc.co.uk/news/business-18234057


...In plain terms, by mid-June, Greece could very well be controlled by an anti-austerity, anti-bailout party that wants to completely do away with the second Greek bailout (which means a potential disorderly default).

This actually is the best possible outcome for Greece as the alternative is outright anarchy...   http://www.marketoracle.co.uk/Article34874.html 

http://www.bbc.co.uk/news/business-18074674 What could happen if Greece leaves the Euro?

http://www.economonitor.com/nouriel/2012/05/17/greece-must-exit/ The Greek euro tragedy is reaching its final act: it is clear that either this year or next, Greece is highly likely to default on its debt and exit the eurozone.

Postponing the exit after the June election with a new government committed to a variant of the same failed policies (recessionary austerity and structural reforms) will not restore growth and competitiveness. Greece is stuck in a vicious cycle of insolvency, lost competitiveness, external deficits, and ever-deepening depression. The only way to stop it is to begin an orderly default and exit, coordinated and financed by the European Central Bank, the European Union, and the International Monetary Fund (the “Troika”), that minimizes collateral damage to Greece and the rest of the eurozone.

Europe imploding

Here are the major developments we’ve seen so far:

• Merkel confirmed that nothing will happen at today’s EU summit in statements made to reporters.
• According to German newspaper Die Zeit, the European Central Bank has already set up a crisis committee to prepare for a possible Greek exit from the eurozone.
• A Eurogroup draft document seen by Reuters suggested that the European Union offer Greece €50 billion to leave the euro quietly (via ForexLive).
• Clemens Fuest, a senior advisor to the German Finance Ministry, told us that the German government is not as resolute about Greece sticking to its current bailout plan as they’d like everyone to believe.
• Investors are chattering about an unconfirmed report that Merkel is proposing some kind of bank deposit guarantee program.
• Hollande told reporters that while he’s not expecting EU leaders to endorse eurobonds today, they could make some progress on this issue in June (via @ItalianPolitics).
• Citi Chief Economist said that his team now believes Greece will leave the EMU on January 1, 2013, or else early next year.

http://sreaves32.wordpress.com/2012/05/24/europe-is-imploding-europe-central-bank-preparing-for-greece-eurozone-exit-greek-euro-exit-shows-hazards-in-46-hour-weekend/

What happens when a country defaults? http://www.ft.com/cms/s/2/0a35504a-0615-11e1-a079-00144feabdc0.html#axzz1vo638bLh 

Deputy Prime Minister Nick Clegg says a Greek exit from the euro would have a "very unpredictable knock on effect" on the global economy.

http://www.telegraph.co.uk/finance/financialcrisis/9287949/Nick-Clegg-Greek-eurozone-exit-will-not-bring-instant-relief.html

ROME/HELSINKI, May 24 (Reuters) - At least half of euro zone governments as well as banks and large companies are making contingency plans in case Greece decides to leave the single currency area, even though the preferred option is still for Athens to keep the euro.

Italy's Deputy Economy Minister Vittorio Grilli said his country was ready for such a possibility, if Greek voters on June 17 give power to parties that reject reforms agreed with the EU and IMF in exchange for emergency loans.

http://www.reuters.com/article/2012/05/24/eurozone-greece-contingency-idUSL5E8GODPN20120524

Forex Expert Advisors

There are lots of ideas meant to help traders make money, but it is easy to see why expert advisor systems stand out among them as being so appealing for so many traders. Although this type of technology was first implemented in the futures market, the currency exchange market quickly saw the advantages to these programs and eagerly stepped up in implementing them. Their growing popularity on the forex market shows how useful the systems can be for traders who use them.

Depending on the system's available features and level of technological support for the software, expert advisor systems will support at least most of the indicators commonly used on the currency market: types of averages (exponential moving average, weighted moving average, simple moving average, triangular, variable and time series moving average), Wilder's average true range, standard deviation, mass index, trailing stops, vertical horizontal filter, fixed stops and limits, and many more. They can perform trading operations in real time. In other words, it only takes seconds, so the trader doesn't have to wait for the trade to go through. It also allows for greater diversification of trading and being capable of analyzing data over very short periods of time. That creates more investment opportunities and the potential for profit both in local markets and internationally. Expert advisor programs allow short term data analysis, which was not possible until the automated systems were produced and gives the trader an edge in that he can now easily predict market trends within a short period of time and react accordingly.

One of the greatest benefits of these systems is that they increase daily trades to a large degree. This is the logical result of transaction execution times dropping from seconds to a few fractions of a second. More trades to go through per trader in a twenty-four hour period. Correspondingly, the number of traders is going up all the time, which further allows the market to expand even more and move even more quickly.

Forex expert advisors instantly execute every transaction, twenty-four hours a day, seven days a week, where a human trader would have to sleep or spend time with his family instead of checking the market. The programs adhere to the usual trading rules and follow the same indicators as manual traders. They offer access to a number of different functions, including money management, automatic trailing stops, discretionary market orders and limit and/or stop orders, and provide various indicators for technical analysis to give the human trader the chance to study current trends and then develop strategies based on those trends for future trading.

Technology is constantly changing and improving. As more and more investors learn how to take advantage of its benefits, expert advisors will continue to help the market develop, making it even easier for people to profit from foreign currency trading.

Banks prepare for the return of the drachma

(Reuters) - Banks are quietly readying themselves to start trading a new Greek currency. Some banks never erased the drachma from their systems afterGreece adopted the euro more than a decade ago and would be ready at the flick of a switch if its debt problems forced it to bring back national banknotes and coins.

http://www.reuters.com/article/2012/05/11/us-banks-drachma-idUSBRE84A0DC20120511

BBC: How does Greece leave the Euro? http://www.bbc.co.uk/news/business-15575751

http://en.wikipedia.org/wiki/Greek_drachma

“Drachma Clauses”: Planning for Greece’s Exit from the Eurozone

http://www.zerohedge.com/contributed/2012-16-21/%E2%80%9Cdrachma-clauses%E2%80%9D-planning-greece%E2%80%99s-exit-eurozone