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☆ Relax, SVB's implosion is nothing like the 2008 financial crisis, and the economy will be fine
▼ + stars: | 2023-03-13 | by ( Jacob Zinkula | ) www.businessinsider.com time to read: +5 min

But it's not a repeat of the 2008 financial crisis, when the government stepped in to support the US banking system. In recent days, many have drawn comparisons to the 2008 financial crisis, when the federal government doled out roughly $200 billion to hundreds of banks to support the US banking system. The size of SVB's bank failure has only been surpassed once in American history — by Washington Mutual when it collapsed in 2008. While the economy and markets aren't the same thing, a struggling market can be a negative leading indicator for a weakening economy. If the US economy does enter a recession as some experts expect, SVB's failure is unlikely to be the reason why.

☆ GOP presidential contenders cast blame for Silicon Valley Bank collapse
▼ + stars: | 2023-03-13 | by ( Kevin Breuninger | ) www.cnbc.com time to read: +5 min

Employees stand outside of the shuttered Silicon Valley Bank (SVB) headquarters on March 10, 2023 in Santa Clara, California. Former President Donald Trump and other 2024 Republican presidential hopefuls spoke out over the weekend on the failure of Silicon Valley Bank , offering early hints of their varied approaches to the markets. Silicon Valley Bank, or SVB, was shuttered by financial regulators last week, marking the largest failure of a banking institution since the 2008 financial crisis. Nikki Haley on Saturday night declared, "taxpayers should absolutely not bail our Silicon Valley Bank." "Now depositors at healthy banks are forced to subsidize Silicon Valley Bank's mismanagement.

☆ U.S. government steps in and says people with funds deposited at SVB will be able to access their money
▼ + stars: | 2023-03-12 | by ( Jeff Cox | ) www.cnbc.com time to read: +5 min

Those with money at the bank will have full access starting Monday. The Treasury Department designated both SVB and Signature as systemic risks, giving it authority to unwind both institutions in a way that it said "fully protects all depositors." The Fed facility will offer loans of up to one year to banks, saving associations, credit unions and other institutions. The SVB failure was the nation's largest collapse of a financial institution since Washington Mutual went under in 2008. Authorities had spent the weekend looking for a larger institution to buy SVB, but came up short.

☆ Paul Krugman says Silicon Valley Bank could've been called the 'Schmoozing and Vibes Bank,' but it's probably not another 'Lehman moment'
▼ + stars: | 2023-03-11 | by ( Ryan Hogg | ) www.businessinsider.com time to read: +2 min

Paul Krugman said SVB maybe should have been called the "Schmoozing and Vibes Bank." As far as I can tell, it was just unusually good at cultivating relationships with, um, Silicon Valley, specifically VC," Krugman said. "Maybe it should have been called Schmoozing and Vibes Bank." While this created huge problems for SVB, Krugman believed there was little chance of contagion to other banks. The Nobel Prize-winning economist said he did worry about the effects of SVB's collapse on the broader VC ecosystem.

☆ UK finance minister and Bank of England work to contain SVB fallout
▼ + stars: | 2023-03-11 | by ( ) www.reuters.com time to read: +3 min

The Bank of England on Friday said it was seeking a court order to place SVB UK into an insolvency procedure. Advisory firm Rothschild & Co is exploring options for SVB UK as insolvency looms, two people familiar with the discussions told Reuters. More than 250 UK tech firm chief executives signed a letter addressed to Jeremy Hunt, the British chancellor of the exchequer (finance minister), calling for government intervention, a copy seen by Reuters shows. "The recent news about SVB going into insolvency represents an existential threat to the UK tech sector," the letter said. Sky News had reported earlier on Saturday that a British clearing bank, the Bank of London, was considering a rescue bid for the UK arm of SVB.

☆ Silicon Valley Bank Collapse Becomes Campaign Topic as GOP Warns Against Bailout
▼ + stars: | 2023-03-10 | by ( John Mccormick | ) www.wsj.com time to read: +1 min

The sudden collapse of Silicon Valley Bank has set the stage for the latest fight over the role of the federal government in the financial sector, with Republican 2024 presidential hopefuls threatening to make any hint of a taxpayer-funded bailout a campaign issue. “Taxpayers should absolutely not bail out Silicon Valley Bank,” she said in a statement. “Private investors can purchase the bank and its assets. It is not the responsibility of the American taxpayer to step in. “But we are concerned about depositors and are focused on trying to meet their needs.”

☆ Sri Lanka needs institutional changes for long-term debt sustainability, says professor
▼ + stars: | 2023-03-10 | by ( Sumathi Bala | ) www.cnbc.com time to read: +4 min

Buddhika Weerasinghe | Bloomberg | Getty ImagesSri Lanka needs institutional reforms in order to achieve long-term debt sustainability, said Steve Hanke, who played a key role in establishing new currency regimes in emerging markets like Argentina and Montenegro. "In fact, most of the personalities involved in Sri Lanka at the high level are exactly the same as they've been for years. In September, the IMF outlined a series of steps that it wanted Sri Lanka's government to implement prior to loan approval, which included major tax reforms. "Debt relief from Sri Lanka's creditors and additional financing from multilateral partners will be required to help ensure debt sustainability and close financing gaps," the fund said at the time. "The Secretary welcomed Sri Lanka's commitments to transparency and comparable treatment for all bilateral official and private creditors."

☆ The implosion of Silicon Valley's largest bank has investors worried worse is to come: 'There might be some kind of crack in the financial system'
▼ + stars: | 2023-03-10 | by ( Hasan Chowdhury | James Dean | ) www.businessinsider.com time to read: +5 min

The implosion of the California lenders Silicon Valley Bank and Silvergate has investors worried. Christopher Whalen, the chairman of Whalen Global Advisors, a financial consultancy, said Silicon Valley Bank was "just the tip of the iceberg." He added that the situation at Silicon Valley Bank was "a reminder that many institutions are sitting on large unrealized losses" on bond holdings. Mould said the "fire sale" of Silicon Valley Bank's bond portfolio raised broader concerns. Silicon Valley Bank CEO Greg Becker on Thursday implored customers to "stay calm" in an apparent bid to stave off further mass withdrawals and avert collapse.

It was not clear what new support China, the world's biggest sovereign creditor, had extended to Sri Lanka on Monday. By end-2020, Sri Lanka owed the Export-Import Bank of China $2.83 billion or 3.5% of the island's external debt, according to IMF data. Sri Lanka needs to repay about $6 billion on average each year until 2029 and will have to keep engaging with the IMF, Wickremesinghe said. Countries in debt distress such as Zambia and Sri Lanka have faced unprecedented delays in securing IMF bailouts as China and Western economies have clashed over how to provide debt relief. Sri Lanka has been waiting for about 187 days to finalise a bailout after reaching a staff-level deal with the IMF.

☆ Sri Lanka expects approval of $2.9 billion IMF deal after China support
▼ + stars: | 2023-03-07 | by ( Uditha Jayasinghe | ) www.reuters.com time to read: +4 min

"Sri Lanka has completed all prior actions that were required by the IMF," Wickremesinghe said. It was not clear what new support China, the world's biggest sovereign creditor, extended to Sri Lanka on Monday. By end-2020, Sri Lanka owed the Export-Import Bank of China $2.83 billion or 3.5% of the island's external debt, according to IMF data. Sri Lanka needs to repay about $6 billion on average each year until 2029 and will have to keep engaging with the IMF, Wickremesinghe said. Sri Lanka has been waiting for about 187 days to finalise a bailout after reaching a staff-level deal with the IMF.

☆ With China's support, Sri Lanka expects nod for $2.9 bln IMF deal
▼ + stars: | 2023-03-07 | by ( Uditha Jayasinghe | ) www.reuters.com time to read: +4 min

"Sri Lanka has completed all prior actions that were required by the IMF," Wickremesinghe said. It was not clear what new support China, the world's biggest sovereign creditor, extended to Sri Lanka on Monday. By end-2020, Sri Lanka owed the China EximBank $2.83 billion or 3.5% of the island's external debt, according to IMF data. Sri Lanka needs to repay about $6 billion on average each year until 2029 and will have to keep engaging with the IMF, Wickremesinghe added. Sri Lanka has been waiting for about 187 days to finalise a bailout after reaching a staff-level deal with the IMF.

☆ Analysis: Cash-strapped countries face IMF bailout delays as debt talks drag on
▼ + stars: | 2023-03-02 | by ( Jorgelina Do Rosario | ) www.reuters.com time to read: +7 min

IMF funding is often the sole financial lifeline available to countries in a debt crunch, and key to unlocking other financing sources, with delays putting pressure on government finances, companies and populations. Though staff agreements can be reached without financing assurances, the IMF board needs them to approve the programme. Chinese Premier Li Keqiang said on Wednesday the country is willing to "constructively" participate in solving debt problems of relevant countries under a multilateral framework. But Beijing has always emphasised all creditors should follow the principle of "joint action, fair burden" in debt settlements. Adding another layer of complexity to these debt talks, the Common Framework doesn't lay out precise rules on how a debt restructuring with bilateral creditors should work.

☆ Gulf states have given billions in aid to Egypt. Now they want to see returns
▼ + stars: | 2023-03-01 | by ( Nadeen Ebrahim | ) edition.cnn.com time to read: +7 min

He was referring to the tens of billions of dollars in bailouts his country has received from the wealthy Gulf monarchies over the past decade. Many of those assets have long been under the control of Egypt’s military, an economic behemoth and the backbone of Sisi’s power. This time, however, Gulf Arab allies – especially Saudi Arabia and the United Arab Emirates – want to see returns. Last year alone, Gulf states pledged $22 billion to Egypt as it faced an economic crisis caused partly by the fallout from the Ukraine war, Reuters reported. Analysts say that Egypt was pushed by Gulf states to accept the IMF’s conditions, especially those on privatization.

☆ Indian PM Modi urges G20 to focus on unsustainable debt
▼ + stars: | 2023-02-24 | by ( ) www.reuters.com time to read: +1 min

MUMBAI, Feb 24 (Reuters) - The financial viability of many countries is being threatened by unsustainable debt, India's Prime Minister Narendra Modi said on Friday, as he called for the Group of 20 (G20) to focus on the world's most vulnerable citizens. Even the financial viability of many countries is threatened by unsustainable debt levels," Modi said. Many societies are suffering due to rising prices," Modi said in his address to delegates. Reuters reported last week that India is drafting a proposal for G20 countries to help debtor nations by asking lenders, including China, the world's largest sovereign creditor, to take a large haircut, or accept losses, on loans. Reporting by Swati Bhat and Shilpa Jamkhandikar; editing by Sudipto Ganguly, Robert BirselOur Standards: The Thomson Reuters Trust Principles.

☆ ‘No Basis in Mathematical Reality’
▼ + stars: | 2023-02-22 | by ( James Freeman | ) www.wsj.com time to read: 1 min

James Freeman is assistant editor of The Wall Street Journal's editorial page and author of the weekday Best of the Web column. He is the co-author of "Borrowed Time: Two Centuries of Booms, Busts and Bailouts at Citi," recognized as a New York Times Editors' Choice and a Financial Times Business Book of the Month. He is a contributor to the Fox News Channel and a host of "Deep Dive" on Fox Nation. Before joining the Journal in September 2007, James served as investor advocate at the U.S. Securities and Exchange Commission, where he encouraged the transformation of financial reporting technology to benefit individual investors. Follow James on Twitter @FreemanWSJ

Treasury said the government planned to take on 254 billion rand ($14 billion) of Eskom's 423 billion rand debt it said was at risk of default, to enable the utility to pay down the debt and interest obligations. South Africa has been struggling for years to overhaul Eskom, which is plagued by corruption and mismanagement and has received 263.4 billion rand in bailouts since 2008/09. Treasury said about 168 billion rand of Eskom’s debt relief will be in capital and 86 billion rand in interest payments over the next three years. Eskom's debt relief has strict conditions, Treasury said. A proposal to address the debt municipalities owe Eskom, at 56.3 billion rand as of end December 2022, was being finalised.

MUMBAI/ISLAMABAD, Feb 15 (Reuters) - Inflation in Pakistan could average 33% in the first half of 2023 before trending lower, and a bailout from the International Monetary Fund alone is unlikely to put the economy back on track, a senior economist with Moody's Analytics told Reuters. "Our view is that an IMF bailout alone isn't going to be enough to get the economy back on track. What the economy really needs is persistent and sound economic management," senior economist Katrina Ell said in an interview on Wednesday. Low income households could remain under extreme pressure as a result of high inflation on account of being disproportionately exposed to non-discretionary items. The weaker rupee, which is plumbing record lows, is adding to imported inflation while domestically high energy costs on the back of tariff increases and still elevated food prices is likely to keep inflation high.

London CNN —South Africa’s President Cyril Ramaphosa has declared a national state of disaster in response to the country’s drawn-out energy crisis, calling it “an existential threat” to Africa’s most developed economy. Blackouts in South Africa — or load-shedding as they’re known locally — have been lasting for as long as 12 hours a day. Dwayne Senior/Bloomberg/Getty ImagesRamaphosa said Thursday that the national state of disaster would begin with immediate effect. Eskom has very little backup power, which makes it difficult to take units offline to perform crucial maintenance work. Years of mismanagement and systematic corruption are believed to be the key reasons why Eskom has been unable to keep the lights on.

☆ House Republicans just proposed ending the student-loan payment pause and 'prohibiting' Biden's broad debt cancellation as part of 10 major budget cuts
▼ + stars: | 2023-02-09 | by ( Ayelet Sheffey | ) www.businessinsider.com time to read: +4 min

Republicans on the House budget committee put out a list of proposed spending cuts they would support in a debt limit deal. It also noted that it will not touch Medicare and Social Security after Biden called out the GOP for previously wanting to cut the programs. One area for proposed spending cuts focused on President Joe Biden's "student loan bailouts" — the press release said that ending the student-loan payment pause would save $25 billion, and "prohibiting" his broad plan to cancel student debt would save $379 billion. Republican lawmakers have strongly opposed broad student-loan forgiveness — even before Biden announced his plan to cancel up to $20,000 in student debt for federal borrowers at the end of August. Some Republican lawmakers have also previously introduced legislation to end the student-loan payment pause and block Biden from canceling any student debt, though none of those bills even made it to a vote in either chamber of Congress.

☆ Post-QE bond losses rising reality for central banks - BIS
▼ + stars: | 2023-02-07 | by ( Marc Jones | ) www.reuters.com time to read: +3 min

[1/2] The building of the European Central Bank (ECB) is seen amid a fog before the monthly news conference following the ECB's monetary policy meeting in Frankfurt, Germany December 15, 2022. The ECB and a number of national central banks in Europe have issued warnings, though. There were dozens of past examples from developing economies, including Mexico, Chile, the Czech Republic and Israel, where central banks can operate without major difficulties in negative equity, it said. "To maintain the public's trust and to preserve central bank legitimacy now and in the long run, stakeholders should appreciate that central banks' policy mandates come before profits," the paper said. Central banks transfers turning to losses($1 = 0.9317 euros)Reporting by Marc Jones; Editing by Bradley PerrettOur Standards: The Thomson Reuters Trust Principles.

Faced with a shortage of US dollars, Pakistan only has enough foreign currency in its reserves to pay for three weeks of imports. Long lines are forming at gas stations as prices swing wildly in the country of 220 million. Pakistan’s currency, the rupee, recently dropped to new lows against the US dollar after authorities eased currency controls to meet one of the IMF’s lending conditions. The country has been spending more on trade than it has brought in, running down its stock of foreign currency and weighing on the rupee’s value. Pakistan's usually bustling ports, like this one in Karachi, have ground to a halt as the country grapples with a severe shortage of foreign currency.

☆ Ryanair is making record profits as booming demand sends airfares soaring
▼ + stars: | 2023-01-30 | by ( Hanna Ziady | ) edition.cnn.com time to read: +3 min

The low-cost European carrier told customers in an earnings statement on Monday to “book early” before cheaper tickets sell out. It reported record profit for the three months to December 31, increasing airfares by 14% compared to their pre-pandemic level. Passenger numbers for the quarter through December climbed to a record 38.4 million. Fares for the quarter were higher than in 2019 “because of a very strong Christmas and New Year period,” according to O’Leary. It expects that number to grow to 185 million passengers over the 12 months to March 2024.

☆ Why Egypt is asking its people to eat chicken feet
▼ + stars: | 2023-01-18 | by ( Nadeen Ebrahim | ) edition.cnn.com time to read: +17 min

Abu Dhabi CNN —Egypt’s economic situation is so dire that the government is asking people to eat chicken feet. In Egypt, chicken feet are seen as the cheapest of meat items, considered by most as animal waste rather than food. After the recommendation to switch to chicken feet, the price of one kilogram of the product reportedly doubled to 20 Egyptian pounds ($0.67). But those firms don’t operate like private companies, enjoying special privileges without disclosing their financial data to the public. Experts have questioned why international creditors had not leveraged their loans to drive Egypt’s military out of the economy.

☆ South Africa energy blackouts: Ramaphosa skips Davos to tackle crisis
▼ + stars: | 2023-01-18 | by ( Hanna Ziady | ) edition.cnn.com time to read: +9 min

London CNN —South Africa’s President Cyril Ramaphosa was forced this week to cancel a trip to Davos by an escalating energy crisis that is inflicting rolling blackouts on the continent’s most developed economy. At peak times, demand in South Africa averages between 28,000 MW and 34,000 MW. Electricity theft, including by impoverished townships in South Africa, and non-payment by municipal customers have made matters worse. Despite an abundance of sunshine and wind, South Africa still derives about 80% of its electricity from coal. South Africa’s National Energy Crisis Committee, a body run out of Ramaphosa’s office, has proposed several measures to ease the crisis in the short term, including importing energy from neighboring countries and buying excess energy from private producers.

☆ Lufthansa offers Alitalia heir last chance to fly
▼ + stars: | 2023-01-18 | by ( ) www.reuters.com time to read: +2 min

MILAN, Jan 18 (Reuters Breakingviews) - Lufthansa’s (LHAG.DE) boss Carsten Spohr is trying to catch Alitalia’s successor before it crashes. But Italian media and sources familiar with the situation have said the Germans could inject 300 million euros for a 40% stake. That would value ITA at 750 million euros, much less than the lofty 1.2 billion euro valuation that shipping giant MSC, a former Lufthansa ally, was prepared to pay a year ago. Bidders for Alitalia and its successor have come and gone, contributing to the Italian state burning over 10 billion euros of taxpayers’ money in multiple bailouts. Lufthansa, which considers Italy an attractive tourist market, could revamp the smaller carrier by linking it to its network of global routes.

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