India has increased the amount of rupee-denominated debt overseas investors can own to arrest a slide in the currency, which sank to a record low on June 22.
The ownership ceiling on government bonds was raised by $5 billion to $20 billion, the central bank said in an e-mailed statement today. Long-term investors such as sovereign-wealth funds, multilateral agencies, endowment, insurance and pension funds as well as foreign central banks will be allowed to buy the securities, the Reserve Bank of India said in the statement. The combined limit on sovereign and corporate debt was last increased to $60 billion from $50 billion in November.
“Overall it’s positive as the higher limit means more demand for government bonds,” said Krishnamurthy Harihar, a Mumbai-based treasurer at FirstRand Ltd. “But there is some disappointment over how far the measures go.”
The move is intended to shore up Asia’s worst-performing major currency this year. Slowing economic growth, weak public finances, accelerating inflation and the risk of rating downgrades have contributed to a 21 percent decline in the rupee over the past year. Global funds raised their holdings of Indian notes by $4.2 billion this year to $30.3 billion, according to Securities & Exchange Board of India data.
An epic lack of foresight, accuracy and rationale... https://www.tfmetalsreport.com/comment/170246#comment-170246
Syrian forces knew the identity of a Turkish military jet before shooting it down over international airspace, according to Turkey’s ambassador to the United Nations.
“Radio communication among Syrian authorities clearly demonstrates that the Syrian units were fully aware of the circumstances and the fact that the aircraft belonged to Turkey,” Ertugrul Apakan, Turkey’s representative to the UN said in a letter to Secretary General Ban Ki-Moon obtained yesterday.
Syrian forces also shot at a Turkish rescue plane sent to look for the downed pilots, even after Turkey “established coordination with the Syrian authorities,” according to the letter.
Turkey’s latest allegations about last week’s events off the coast of Syria further raised tensions ahead of a North Atlantic Treaty Organization meeting on the incident today in Brussels. Relations between the neighbors and former allies were already strained by Syrian President Bashar al-Assad’s crackdown on anti-government protesters, which has left more than 10,000 people dead.
Syria has criticized Turkey for hosting meetings of Syrian opposition groups, while Turkey has called for a change of regime in its southern neighbor.
Turkey invoked articles four and five of the NATO treaty in seeking today’s meeting, Bulent Arinc, Turkey’s deputy prime minister, told reporters after a Cabinet meeting in Ankara yesterday. Article five requires members to recognize an attack on one as an attack on all and to assist the violated member in any action it deems necessary, including the use of armed force. The U.S. backed the Turkish account....
The document, released ahead of Thursday's EU summit, says such fiscal union could lead to common debt being issued by eurozone countries.It includes the creation of a European treasury, which would have powers over national budgets.
There would also be banking union, with a single European banking regulator and a unified deposit guarantee scheme.
The document was released by European Council President Herman Van Rompuy and was drawn up with the presidents of the European Commission, the Eurogroup and the European Central Bank.
European proposals to reshape the crisis-struck euro area ran into immediate criticism from Germany for putting too much emphasis on debt sharing and too little on controlling national budgets.
The 10-year road map, released today by four officials led by European Union President Herman Van Rompuy, centered on common banking supervision and deposit insurance and a“criteria-based and phased” move toward joint debt issuance. It also suggests that the EU could impose upper limits on annual budgets and debt levels of nations that use the euro.
“Parts of it read like a wish list,” German Deputy Foreign Minister Michael Link told reporters in Luxembourg. The proposals lean “toward various models for mutualizing debt. What comes up short is improved controls,” he said.
Germany’s instant opposition lessened the chances that a June 28-29 summit -- the 19th since the debt crisis broke out in early 2010 -- will point the way out of the turmoil that threatens to splinter the euro currency.
During his first two weeks in office, President Francois Hollande saw French borrowing costs go in one direction, and that was down. Not anymore.
The yield on the French benchmark 10-year bond advanced to 2.60 percent at 9:25 a.m. in Paris, up from a euro-era low of 2.071 percent on June 1. It was as high as 2.902 percent on May 15, when Hollande took office. The rate is at risk of rising further with French banks vulnerable to the region’s debt-ridden nations as economic growth stalls.
Investors already demand more than 6 percent to buy 10-year Spanish securities and almost as much for similar Italian debt. While Hollande has sought to reassure investors in France’s 1.35 trillion-euro ($1.7 trillion) sovereign debt market by repeatedly pledging to cut France’s budget deficit, the financial turmoil to the south makes his task more difficult.
“France has been out of the spotlight, but once the sheer misery of Spain and Italy is figured in, the next target will be France,” said Bill Blain, a Newedge Group Ltd. strategist inLondon. “I’m seeing a very small number of international institutional players buying French debt. People are very nervous.”
It could take several weeks for bank customers to have all the effects of the RBS account problems sorted out, the Financial Ombudsman Service has warned.
A computer software upgrade at RBS failed last week, disrupting many payments into and out of accounts.
The bank said most of the backlog of transactions had been cleared overnight leaving less than 1% unresolved.
It said only "a few specific sets of transactions" were outstanding.
"It is possible a small number of customers may experience delays as we return to a completely normal service," the bank said.
"The full focus of our efforts will now be on delivering the same result for our Ulster Bank customers who continue to experience unacceptable delays to their accounts being updated.
Spain is poised for a downgrade to junk by Moody’s Investors Service, according to investors who sent the cost of default insurance for the nation’s biggest banks and companies close to record highs.
Credit-default swaps on Banco Santander SA (SAN), the country’s biggest bank, jumped 23 percent this quarter to 454 basis points, compared with an all-time high of 474 in November. Banco Bilbao Vizcaya Argentaria SA (BBVA) rose 26 percent to 477, approaching May’s record 516, while phone company Telefonica SA (TEF) surged 70 percent to a record 540 basis points.
Moody’s downgraded 28 Spanish banks yesterday including a two-step cut for Banco Santander and a three-level reduction for BBVA, a week after it lowered Spain’s rating to Baa3, on the cusp of junk. The country remains on review for another cut by New York-based Moody’s after it sought a 100 billion-euro ($125 billion) international bailout for its banks and on speculation losses from its real estate industry will worsen.
“There’s more to come if Moody’s downgrades the sovereign as we expect in the next few weeks,” said Suki Mann, a credit analyst at Societe Generale SA in London. “A one-notch move to Ba1 will likely see all the country’s banking system in junk territory, with the possible exception of Santander.”......
British special forces inside Syria
Tue Jun 26, 2012 8:35PM GMT
DEBKAfile, an Israeli military intelligence website, has reported that unconfirmed first reports from British, French, and Turkish sources say British forces have entered Syria from Turkey, taking the lead of a western military incursion.
Moreover, on Sunday 24 June, The Daily Star reported that Britain’s fighter planes were on stand-by to invade Syria in case Britain’s NATO ally, Turkey, decided to launch a strike on Syria.
DEBKAfile said the British incursion was aimed at securing the start of western intervention in Syria to topple President Bashar Al Assad.
Earlier this year, the Israeli website also revealed that British troops and intelligence agents were operating in the Syrian city of Homs, assisting Syria’s armed rebels in their bloody battle against civilians and the Syrian army.
Moreover, earlier this month, The Daily Star reported that Britain’s Special Air Service (SAS) and MI6 agents were setting up camps in Syria to assist armed rebels if a civil war would break out in the country.
This all and the recent report about the British incursion in Syria comes as earlier this month British Prime Minister David Cameron asked his fellow Tory MPs: “Where shall I invade next? I’ve done Libya” as he stopped in front of a map of the world at his Downing Street flat.
The Tuesday deployment included 15 armored tanks in addition to long-distance guns and other military vehicles, Turkey's Hurriyetdaily reported.
The move comes hours after Turkish Prime Minster Recep Tayyip Erdogan vowed to retaliate against Damascus over the downing of its fighter jet.
Erdogan said that Turkey changes the rules of engagement with Syria and branded its former ally as "a clear and imminent threat".
Syria on Friday said that a Turkish fighter jet, a F-4 Phantom, was downed in Syrian territorial waters west of the village of Om al-Tuyour in Lattakia Province, 10 kilometers from the beach.
Syrian military stressed on Friday that it had engaged the jet in the Syrian airspace “according to the laws that govern such situations.”
Erdogan said Turkey's military jet violated the Syrian airspace for a short time and "by mistake" and it was shot down by Syria "without a single warning."
Syrian Foreign Ministry spokesman Jihad Makdissi on Monday warned NATO against forging any anti-Syria conspiracy on the downing of the Turkish fighter jet.
"Look at what happened to the Americans in Afghanistan and in Iraq. I told [ US president Barack] Obama the same thing," the visiting president said in a meeting with his Israeli counterpart Shimon Peres on Monday.
"Iraq has a pro-Iranian regime after everything that has happened there. These things should be thought out ahead of time before doing something one will regret later," he cautioned."One should not act prematurely."
Putin travelled to Israel on Monday to hold talks with Israeli officials about the Iranian nuclear issue as well as the Syrian crisis.
The US, Israel and some of their allies accuse Tehran of pursuing military objectives in its nuclear energy program.
Washington and Tel Aviv have repeatedly threatened Tehran with a military strike in an attempt to force the Islamic Republic to halt its peaceful nuclear energy program, which has been closely monitored by inspectors from the International Atomic Energy Agency (IAEA).
Iran has fiercely rejected Western publicity that its nuclear program may be diverted to military objectives while insisting that as a signatory to the nuclear Non-Proliferation Treaty and a member of the IAEA, it is entitled to pursue nuclear technology for its numerous civilian purposes.
Unlike Iran, Israel is a non-signatory to the NPT and continues to defy international calls to join the treaty.
Israel, widely believed to possess between 200 to 400 nuclear warheads, maintains a policy of deliberate ambiguity over its nuclear work.
Stockton, Calif. to take up bankruptcy budget plan
By Jim Christie
STOCKTON, Calif., June 26 | Tue Jun 26, 2012 5:53am EDT
STOCKTON, Calif., June 26 (Reuters) - Stockton, California was poised on Tuesday to take a major step toward becoming the largest U.S. city ever to file for bankruptcy after talks with its creditors on Monday at midnight.
Negotiations aimed at averting bankruptcy may press on informally, the city's spokeswoman said, adding that city officials would next discuss any moves toward bankruptcy at the city council meeting on Tuesday evening.
The council's main order of business will be taking up and voting on a proposed budget to guide Stockton during bankruptcy, an option city officials have been considering since February.
City Manager Bob Deis, who the council has authorized to file for Chapter 9 bankruptcy, last week unveiled the budget proposal, also known as a pendency plan.
The plan assumed Stockton, a city of 292,000 people about 85 miles (about 135 km) east of San Francisco, would fail to win concessions from its 18 creditors to close its $26 million shortfall for the fiscal year beginning on July 1.
To help close the budget gap, Stockton's plan would suspend $10.2 million in debt payments, a move likely to trigger rating agencies to further downgrade the city, and reduce spending on employee compensation and retiree benefits by $11.2 million.
About $7 million in savings would come from cutting retiree health care benefits for one year and then phasing them out. Stockton officials have said the benefits are a crushing expense due to their fast rise and projected liability of $417 million.
Stockton's confidential mediation with its creditors .....
Assad says Syria at war as battle reaches capital
By Oliver Holmes
BEIRUT | Tue Jun 26, 2012 6:40pm EDT
BEIRUT (Reuters) - Syrian President Bashar al-Assad declared on Tuesday that his country was at war and ordered his new government to spare no effort to achieve victory, as the worst fighting of the 16-month conflict reached the outskirts of the capital.
Video published by activists recorded heavy gunfire and explosions in suburbs of Damascus. A trail of fresh blood on a sidewalk in the suburb of Qudsiya led into a building where one casualty was taken. A naked man writhed in pain, his body pierced by shrapnel.
Syria's state news agency SANA said "armed terrorist groups" had blocked the old road from Damascus to Beirut.
The declaration that Syria is at war marks a change of rhetoric from Assad, who had long dismissed the uprising against him as the work of scattered militants funded from abroad.
"We live in a real state of war from all angles," Assad told a cabinet he appointed on Tuesday in a speech broadcast on state television.
"When we are in a war, all policies and all sides and all sectors need to be directed at winning this war."
The rambling speech - Assad also commented on subjects as far afield as the benefits of renewable energy - left little room for compromise. He denounced the West, which "takes and never gives, and this has been proven at every stage".....
Rebels storm Pro-Assad Syrian TV channel
BEIRUT | Wed Jun 27, 2012 10:05am EDT
BEIRUT (Reuters) - Gunmen stormed a pro-government Syrian TV channel headquarters on Wednesday, bombing buildings and shooting dead three employees, state media said, in one of the boldest attacks yet on a symbol of the authoritarian state.
President Bashar al-Assad declared late on Tuesday that his country was "at war". U.S. intelligence officials said the Syrian government was "holding fairly firm" and digging in for a long struggle against rebel forces who are getting stronger.
The dawn attack on Ikhbariya television's offices, located 20 km (15 miles) south of the capital, as well as overnight fighting on the outskirts of Damascus showed 16 months of violence now rapidly encroaching on the city.
Ikhbariya resumed broadcasting shortly after the attack that killed three journalists and four security guards, displaying bullet holes in its two-storey concrete building and pools of blood on the floor. One building was almost entirely destroyed.
"I heard a small explosion then a huge explosion and gunmen ran in. They ransacked the offices and entirely destroyed the newsroom," an employee who works at the offices in the town of Drousha told state media at the scene.
WASHINGTON - Higher output from Saudi Arabia and economic troubles in China and Europe have pushed oil prices down 25 percent, putting the pain of sanctions back squarely on Iran and sheltering the U.S. economy from any blowback in the near term. Full Article
LONDON - Without a coherent plan for going it alone, Britain may be drifting towards its biggest strategic move in a generation: a disorderly exit from the European Union. Full Article
LONDON - Here's a nightmare for Europe's leaders to ponder: a bond auction fails in Spain, spreading solvency worries to Italy and beyond and triggering uncontrollable bank runs that spell the single currency's end. Full Article
Seventeen years ago fund manager Michael F. Price spurred the merger of Chase Manhattan Corp. and Chemical Banking Corp., creating what was then the biggest U.S. bank and laying the foundation for JPMorgan (JPM) Chase & Co.
Now he has a new message: It’s time to break up.
The stocks of five of the six biggest U.S. banks --JPMorgan, Bank of America Corp. (BAC), Citigroup Inc. (C), Goldman Sachs Group Inc. (GS) and Morgan Stanley (MS) -- are languishing at or below tangible book value. That means the pieces are worth more than the whole, Price said.
“Within the banks are wonderful assets,” said Price, who sold his fund-management company for $610 million in 1996 and now runs MFP Investors LLC in New York. “How long are the boards of directors going to stand by and take no action and let them be pounded? So far there’s no indication that any of these banks or boards of banks is willing to do anything about it.”
Politicians and regulators have resisted calls from some investors to split up conglomerates that were assembled over two decades by executives such as former Citigroup Chief Executive Officer Sanford “Sandy” Weill and former Bank of America CEO Ken Lewis. These universal banks offered customers everything from checking accounts and insurance to derivatives trading and merger advice. The 2008 financial crisis and subsequent performance of the companies is calling that into question......
European Central Bank PresidentMario Draghi is contemplating taking interest rates into a twilight zone shunned by the Federal Reserve.
While cutting ECB rates may boost confidence, stimulate lending and foster growth, it could also involve reducing the bank’s deposit rate to zero or even lower. Once an obstacle for policy makers because it risks hurting the money markets they’re trying to revive, cutting the deposit rate from 0.25 percent is no longer a taboo, two euro-area central bank officials said on June 15.
“The European recession is worsening, the ECB has to do more,” said Julian Callow, chief European economist at Barclays Capital in London, who forecasts rates will be cut at the ECB’s next policy meeting on July 5. “A negative deposit rate is something they need to consider but taking it to zero as a first step is more likely.”
Should Draghi elect to cut the deposit rate to zero or lower, he’ll be entering territory few policy makers have dared to venture. Sweden’s Riksbank in July 2009 became the world’s first central bank to charge financial institutions for the money they deposited with it overnight. The Fed rejected cutting its deposit rate from 0.25 percent last year. With Europe’s debt crisis damping inflation pressures and curbing growth, the ECB may feel the benefits outweigh the negatives.
“A rate cut could have an important psychological effect in the current environment,” said Christoph Kind, head of asset allocation at Frankfurt Trust, which manages about $20 billion.“Negative interest rates aren’t an irrational concept. I’m not sure, though, whether in the case of the ECB it will have the desired effect.”........
DEBKAfile Exclusive Report June 27, 2012, 9:23 AM (GMT+02:00)
Another urgent bid for the US to lead an allied offensive against Syria’s ruling regime fell on deaf ears in Washington. It came Tuesday, June 26, from Turkish Prime Minister Tayyip Erdogan, who is spoiling for action after a Syrian anti-air ambush downed a Turkish reconnaissance jet flying over Latakia last Friday.
In several phone calls to President Barack Obama, Erdogan argued forcefully that the incident provided the perfect opening for a Western-Muslim-Arab offensive, according to debkafile’s military and intelligence sources. This offensive, said the Turkish leader, could drive into Syria, create no-fly zones, attack regime and military targets and establish safe zones for rebels and refugees. The Turkish army, air force and navy stood ready for immediate action, he said, but the US must take the military lead in this operation – and not just “from behind,” as in Libya.
Obama replied the time had not yet come for direct US military intervention in Syria, and covert operations by American, British, Turkish and French special operations forces should continue inside the country.
Erdogan maintained that covert tactics would neither stop the bloody violence in Syria nor upend the Assad regime. Only the open exercise of American military might and logistic and military capabilities could work and without it Turkey was constrained from going forward on its own.
That disagreement was behind the mixed signals coming from Ankara over the ....
Obama “reconsiders” military attack on Iran
Jume 26, 2012
In the wake of failed diplomacy, US President Barack Obama is in the process of “reconsidering” his decision to hold off on military action against Iran. Defense Secretary Leon Panetta was in Riyadh to sound out Saudi rulers on a combined US-GCC operation. In its coming issue, out Friday, DEBKA-Net-Weekly explores the prospects of this operation, along with revelations about President Vladimir Putin’s talk with Prime Minister Binyamin Netanyahu. From Jerusalem, Putin issued his “most striking warning to Obama.”