Retailers warn euro crisis hitting consumers

The euro zone debt crisis is sapping consumer confidence and if policymakers do not take effective action soon the consequences will be felt the world over, retail executives warned on Monday.

A survey of 100 retailers with annual turnover of more than $1 billion, published on the first day of the World Retail Congress in Berlin, showed western European store groups more pessimistic about domestic consumer confidence than those in any other part of the world, except Australia.

"People are afraid of losing their money. People are not spending as they could," Lovro Mandac, chairman of German department store chain Kaufhof (MEOG.DE) and vice president of the German retail federation told an audience of around 900 industry leaders. Read more at Reuters

With The Twist, The Federal Reserve Is Pushing On A String

In a move that some are calling QE3, the Federal Reserve announced yesterday that it will engage in a policy called “the twist” – selling short-term bonds and buying long-term bonds in hopes of artificially reducing long-term interest rates. If successful, this policy (we are told) will incentivize more borrowing and stimulate growth.

I’ve freely admitted before that it is difficult to identify the right monetary policy, but it certainly seems like this policy-at best-an ineffective gesture. This is why the Fed’s various efforts to goose the economy with easy money have been described as “pushing on a string.”

Here are two related questions that need to be answered.

1. Is the economy’s performance being undermined by high long-term rates?

Considering that interest rates are at very low levels already, it seems rather odd to claim that the economy will suddenly rebound if they get pushed down a bit further. Japan has had very low interest rates (both short-run and long-run) for a couple of decades, yet the economy has remained stagnant. Read More at Forbes

Warnings mount on euro crisis as G20 gathers

Seven world leaders on Thursday demanded Europe act more decisively to quell its debt crisis as a European Central Bank study warned that the entire euro currency project was now in peril.

As top finance officials gathered in Washington for meetings of the Group of 20 and International Monetary Fund, an open letter to G20 president France from the leaders of Australia, Canada, Indonesia, Britain, Mexico, South Africa and South Korea stressed the threat of the euro zone crisis spreading worldwide.

"Euro zone governments and institutions must act swiftly to resolve the euro crisis and all European economies must confront the debt overhang to prevent contagion to the wider global economy," the seven leaders wrote.

"The euro zone must look at all possible options to ensure long-term stability in the world's second largest international currency."

U.S. Treasury Secretary Timothy Geithner also stepped up his warnings to Europe, saying that stemming the crisis was more important than efforts to boost European growth, and that it was essential to provide enough resources to prevent a Greek default. But he expressed faith Europe would act. Read more at Reuters

UBS, the big bank that can't stay out of trouble, shakes the City again

Blue lights flashing, a waiting police van roared into life as it prepared to drive alleged rogue trader Kweku Adoboli into custody from his home in Bethnal Green in the early hours of Thursday. And inside a building on Finsbury Avenue in the heart of the Square Mile, Adoboli's employers at UBS knew the Swiss bank was about to be rocked to its foundations – again.

The drama unfolding at UBS's London headquarters was the worst nightmare for a management who have been striving to restore the bank's reputation.

Chief executive Oswald Grübel pleaded with investors to stick with the bank, saying in a letter this weekend: "What has happened in no way diminishes [our commitment] to working with you on pursuing your financial interests and achieving your goals."

During the credit crunch, UBS was left reeling. It was bailed out by the Swiss government after being forced to write down $50bn (£31bn) linked to US mortgage-backed securities in 2008. It faced charges in the same year of providing services to American clients seeking to evade taxes and was fined nearly $800m by the US authorities in a long, tortuous case that heaped shame on the Swiss financiers.

The Guardian

Stocks roiled by Europe’s dept crisis

NEW YORK (CNNMoney) -- Europe's financial state is a mess, and that's sending stocks on a roller coaster ride as investors parse through the good, the bad and the downright confusing news about the state of affairs.

U.S. stocks rose at the open, then drifted lower, turned modestly higher, went back down and finally turned mixed -- that was all within the first hour of trading.

After a choppy start, stocks took a breather and posted modest gains. About two hours into the trading day, the Dow Jones industrial average (INDU) rose 10 points, or 0.1%. The S&P 500 (SPX) added 3 points, or 0.2%, and the Nasdaq composite (COMP) gained 15 points, or 0.6%.

"Europe is the overriding issue," said Derek Hoyt, chief investment officer at KDV Wealth Management. "It's a fickle market, and I don't see that changing for a while." Read more at CNN Money

German Leaders Debate Next Move, As Greece Inches Closer To Default

BERLIN — In Germany, patience is wearing thin. Greece has floundered and failed to produce any noticeable economic results after more than a year of bail-out payments from the European central bank. While the safety of euro zone economies is still considered essential to maintaining the strength of the German economy, the time for German fiscal aid to Athens may quickly be passing.

Instead of talking about how much more in bail-out funds Germany should allot to Greece, leaders in Berlin are talking more today about “Umschulden” – Restructuring... Read more at Forbes

Wall Street up 2 percent as Europe concerns ease

Stocks rallied on Wednesday, reversing three days of losses on optimism the European debt crisis might ease after Germany's top court smoothed the way for Berlin's participation in bailout packages.

All major indexes gained as much as 2 percent, and all 10 S&P sector indexes were higher in a broad rally.

European stocks bounced back from a two-year low after the German court rejected lawsuits aimed at blocking the country from joining in to aid Greece and other nations.

But the court said the government must get approval from a parliamentary committee, which could further slow a response. The FTSEurofirst 300 index of top European shares closed up 3 percent. Read more at Reuters

The Swiss Franc Becomes Swiss Cheese

So much for free-market thinking in Switzerland. The country’s decision to limit the appreciation of the franc against the euro was certainly a game-changer.

Although, I’m sure global hedge funds will mint huge profits by exploiting the artificial construct. Hey, over the past couple decades, investors like George Soros have made instant billions by making big currency bets.

Investors are also scrambling to rethink the “safe haven” trade. To this end, the dollar remains attractive, as well as the yen and even the euro. Although, I think the Chinese yuan will also get a boost. Read More at Forbes