Plugging the Gaps


Eurozone: Banco Espirito Santo gets its bailout
Turkey: Inflation accelerates in July
United States: 12 of 18 US primary dealers say Federal Reserve won’t raise interest rates before second half 2015
United Kingdom: Shadow MPC in favour of early UK interest rate rises


Good morning,

American banks are making money hand over fist, yet here in Europe the clean-up of balance sheets continues with more and more public money being still ploughed into badly-run banks six years after the on-set of the crisis.

If anything underscores the difference in terms of urgency between the two major economic blocs, it is the relative swiftness of the US response and the protracted denial in Europe, leading ultimately to political game-playing and a banking system which is not functioning.

A few weeks ago, the Troika left Portugal declaring “job done”, and now the government has just come up with a wad of cash to keep its largest bank afloat.

Portugal will spend €4.9 billion ($6.58 billion) to rescue its largest listed bank. The rescue of Banco Espirito Santo, which was unveiled after a frenzied weekend of discussions between Portuguese and European Union officials, comes after weeks of bad news about the financial state of the lender.

Under the rescue plan, Banco Espirito Santo, or BES, will be split into a “good bank”, renamed Novo Banco and a “bad bank”, which will house BES’s exposures to the troubled Espirito Santo business empire, which last week tipped the bank in to a record €3.6 billion euros loss.

This should have all been done years ago.

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Global Macro-Daily Note 5th Aug 2014


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