IMF seeks to boost half a trillion more in firepower

The Internationaly Monetary Fund issued a statement today, suggesting that it will try to raise close to $500 billion in new funds from cash rich countries like Brazil, China, India and the oil exporters to lend to the eurozone countries in financial difficulties. The question here is, where are they going to shore up this cash-pile, taken that, the countries mentioned have their own little pesky internal issues: China still is at the brink of a real estate collapse and India is going through a massive devaluation of its ruppee.

France downgraded to AA+ and what it means for the rest of EU

In a move that only confirms what the rest of the world already knew, financial ratings agency Standard and Poor`s downgraded Friday 9 of the Eurozone countries: Cyprus, Italy, Spain and Portugal by two notches and Austria, France, Malta, the Slovak Republic and Slovenia by one notch. By far the biggest implications are for the downgrade of France from its triple A status to AA+ because it will consequently mean that its EFSF guarantees will not be as high rated as before and threaten to bring down the AAA status of this special investment vehicle.

Like a boss: about the upcomming Euro-bonds

When mentioning the possibility of a joint euro-bond a few years ago the audience would have almost instantly burst into laughter and the one bringing it into discussion would probably have realised what a fool he suddenly looked like. Not anymore, peeps, as the French President Sarkozy is pressing for allowing the European Central Bank to issue joint bonds in order to stop the "stampede against European debt". This move comes after yesterday, Germany has failed to auction 10 year Bunds (considered the most safest debt instruments in the entire Eurozone) with a bid/cover rate of only 1.07 and an actual bid of 65% of the 6 billion asked. The rest of 35% had to be covered by the German Bundesbank. As Germany is finding it harder and harder to borrow at such low yields, the only way to stop the bloodbath will definitely be to monetize through the European Central Bank.

German Banks showing signs of weakness

The German financial sectors has been hit hard by the European debt crisis and rumors are now emerging of more and more financial institutions that lack the capital to withstand more pain. Even if they are not in the top 4 banks by Italian and Greek debt holdings (the bonds that were hit by far by the recent debacle), Deutsche Bank, through its North American Taunus Group and Commerzbank are maintaining toxic Euro-debt at a very thin capitalization. I am talking here about contagion at the very core of the European Union.

FOREX update: All roads lead to Rome

So much erratic behavior on the FOREX markets today as the European contagion has definitely spread to Italy. Berlusconi has yet to resolve the political crisis which his country is facing as the austerity measures have not been voted by the dwindling majority. As a result, 10 year Italian bond prices have soared past 7%, a level at which Greece was already asking for European bailout and without quick measures Italy will follow the same path.