These are stories Report on Business is following Tuesday, June 26, 2012.
Follow Michael Babad and the Globe's top business stories on Twitter.
Declining, whining and nein-ing
It's getting even uglier in the euro zone, adding to the already tense pressure on European Union leaders as they head toward their summit in Brussels Thursday and Friday.
Divisions run deep, and finger-pointing continues, in what is said to be another crunch week for the 17-member monetary union. At the same time, prospects are sinking.
It's difficult to keep up: A fresh reading today showed Italian shoppers pulling back, Spanish and Italian borrowing costs surged at auctions today, the European Commission is preparing a new plan, and the finance ministers of Germany, France, Italy and Spain are meeting for a pre-summit gathering.
This came a day after Cyprus formally requested a bailout, the fifth member of the euro zone to seek a rescue.
"The country had just days left to recapitalize one of its largest banks, or it risked running out of cash," chief market strategist David Jones of IG Index said of the troubles in Cyprus.
"Although the sums involved, around €10-billion, are relatively small when compared to Spain, it is a sign of how widespread the crisis really is," he said in a research note today.
"Finance ministers from the big four euro zone countries (France, Germany, Italy and Spain) will assemble in Paris today for preliminary talks, and while there might be discussion of tighter EU control of national budgets, reports this morning indicated that there would be no progress on closer fiscal union until the end of this year," he added. "At this rate, there might not be a euro zone left by then."
There are many proposals making the rounds, the latest the plan by the EC, which, like others, is pushing for banking union and a euro bond that would help bring down borrowing costs across the region. But that could take years to see the light of day, and, at any rate, German Chancellor Angela Merkel is steadfast in her opposition to common debt, as well as the so-called banking union that would spread the risks of ailing banks throughout the group. Ms. Merkel has "nein" down pat in her push for fiscal discipline among all 17 countries, as our European correspondent Eric Reguly writes in today's Report on Business.
The new EC plan, a softer version of what was originally envisioned, is made up of four "building blocks" meant to bring Europe under tighter control.
A new financial system: "Such a framework elevates responsibility for supervision to the European level, and provides for common mechanisms to resolve banks and guarantee customer deposits."
- Budget integration: "An integrated budgetary framework to ensure sound fiscal policy making at the national and European levels, encompassing co-ordination, joint decision-making, greater enforcement and commensurate steps towards common debt issuance. This framework could include also different forms of fiscal solidarity."
- Growth initiative: An integrated economic policy framework which has sufficient mechanisms to ensure that national and European policies are in place that promote sustainable growth, employment and competitiveness, and are compatible with the smooth functioning of EMU."
- Accountability: "Ensuring the necessary democratic legitimacy and accountability of decision-making within the EMU, based on the joint exercise of sovereignty for common policies and solidarity."
A warning here: That will "have to be put in place" over the next 10 years.
This crisis has spread throughout the region like a virus, leading to sniping among governments, and now goes well beyond the initial trouble spots of Greece, Ireland and Portugal. Spain is the focus - Moody's Investors Service downgraded 28 Spanish banks late yesterday - and Italy is also in the crosshairs. To date, the region's leaders have been unable to halt the contagion.
"The downgrade also reflected concerns that Spanish banks exposure to a deteriorating housing markets, in the face of a deteriorating economy and rising unemployment, would reflect badly on the quality of its loan books, which in turn would mean that they could well need further financial assistance," senior analyst Michael Hewson of CMC Markets said of the move by Moody's.
"The problem facing Spanish banks, which is again being reflected in rising Spanish bond yields, is that no one is clear on how much bailout money Spanish banks will end up needing, despite Spanish Finance Minister Luis de Guindos finally getting around yesterday to finally requesting access to the EU's offer of €100-billion of loans for its ailing banking sector," he added.
Separately, Greece named a new finance minister today.
- EU summit seems doomed before it starts
- Plan would let EU rewrite euro zone budgets
- Spain's short-term debt costs nearly triple
- 'Mr. Euro' named Greek finance minister
Barrick names new CFO
Barrick Gold Corp. is bringing back an old hand, taking Ammar Al-Joundi from Agnico Eagle Mines Ltd. to be its chief financial officer.
Mr. Al-Joundi is leaving Agnico-Eagle, returning to the company where he had previously spent 11 years in the finance group.
Business Ticker