Exploding debt threatens America - Top Stories - FT.com
http://m.ft.com/cms/s/0/71520770-4a2c-11de-8e7e-00144feabdc0.html?catid=2&SID=bf897f14bae9c5102c8ac3f2bf14958f Cyrille http://cyrilleuk.blogspot.com Sent from my iPhone
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The financial crisis makes a European Army more likely
The financial crisis is likely to have lasting impact on defence budget and strategies in countries like the UK. Not only the current budget deficits mean that some countries have to reduce their defence spending immediately, but this reduction may be sustained for a long period because as countries de-leverage, GDP growth is likely to stabilize at a lower level than before the crisis. This will require to rethink defence spending and strategy within the European Union. National armies in the EU can be divided into several groups: - UK and France, the two main forces, have nuclear deterrant and ability to deploy troops overseas. - Italy, Germany and Spain have limited armies, only able to operate within an international coalition structure - Smaller countries rely on International coalitions like NATO to defend themselves The inevitable reduction in defence spending should be seen as an opportunity to reorganise EU defence in a more efficient way via specialisation: - Joint UK/France n
Stress Test Results
US officials have made public the result of the stress test of banks . We provide here a summary of the main points: Scope Major Bank Holding Companies (BHC) - 19 in total. Those BHCs hold two thirds of assets and half of loans in the US banking system. Objective In an "adverse scenario", each BHC should have by 2010 a tier 1 capital ratio in excess of 6% and tier 1 common capital ratio in excess of 4%. Banks who don't satisfy both ratios will need to raise more capital to reach it. Results BHC have since the beginning of the financial crisis in 2007 lost $350 billion up to 31 Dec 2008. The stress test shows that further losses of $600 billion ($450 billion from loans and $135 billion from trading and securities) may occur within two years in the "adverse scenario", making the total losses reach $950 billion. In order to absorb such losses and keep the tier 1 ratios above the objective limit, BHCs will need to increase their tier 1 capital by $185 billion. More