Global finance blog - news, jokes, life…

The Obama administration took the first concrete steps Thursday to make good on its pledge to halt new offshore drilling projects, suspending the approval process for new wells off of the Virginia coast.

The Minerals Management Service, part of the Interior Department and the agency charged with issuing new drilling leases, had scheduled three public hearings in Virginia this month to solicit public comment about new wells off of the state’s coast.

The agency said on Thursday that these meetings are now suspended indefinitely, pending a government safety review of offshore drilling.

The process was halted "so that information from the ongoing review of outer continental shelf safety issues that the President has directed can be appropriately considered in those meetings," according to an MMS statement.

Last week president Obama said all new offshore drilling will be halted until the cause of the Gulf of Mexico oil spill is identified.

But leases for new oil wells were not expected for at least a year, whereas the investigation should wrap up in months.

Thursday’s announcement is the first time the Obama administration has actually put the brakes on a plan to open up more areas of the country to offshore drilling bad credit pay day loans.

Obama has supported increased drilling in the past, and just a month ago opened up a few new areas for drilling in the eastern Gulf of Mexico, off the East Coast and in Alaska.

That was the first offering of new leases in the Atlantic since 2008, when a decades-old ban on new offshore drilling expired.

Obama has emphasized he still supports increased domestic oil production, but says it needs to be done safely.

The BP disaster in the Gulf of Mexico, where an oil rig exploded last week, continues to unfold. Eleven of the rig’s workers are presumed dead, and oil is still leaking into the Gulf in what could be one of the worst spills in U.S. history.

The ban on offshore drilling and its subsequent lifting refer only to new drilling. A big swath of the Gulf of Mexico has always been open to oil production, and produces nearly a third of the country’s crude.  

Source

General Motors tried to set a new tone in its relations with the financial community today, showing off its new chief financial officer (with a British accent, no less), displaying a new emphasis on of corporate themes (to build world-class cars and trucks), and demonstrating a new lack of patience with nit-picking questions from securities analysts (no more line-by-line tinkering with earnings models).

But the bottom line was still the same. Emerging from bankruptcy on July 10th of last year, GM lost nearly $1 billion in the third quarter and another $3.4 billion in the fourth quarter. Excluding one-time items like $2.6 billion to the union’s VEBA fund, the earnings picture brightened but still did not climb out of the red.

CFO Chris Liddell said he was "very happy with progress in the first quarter toward a goal of profitability" and he saw a "chance of achieving profitability this year."

He was cautious, however, about the prospects for an initial public offering of GM stock this year, saying it depended on "the readiness of financial markets, the state of the global automotive industry and GM’s business performance." Besides the earnings results, GM embedded some other public relations messages in its announcement.

Liddell recognized retiring vice chairman Bob Lutz by name and praised his achievements in renovating GM’s product line, an apparent effort to dispel rumors that CEO Ed Whitacre had forced Lutz out.

For those who complain that the new GM is being run by the same managers who drove it into the ground, Liddell displayed a chart showing that 12 of the 13 members of the executive committee are new to the company or in new positions since July 2009.

And Liddell repeated the mantra of GM executives since 1992 by declaring that rather than make predictions about GM’s performance for the rest of the year, he would let its deeds speak for themselves.

He did slip into traditional GM-speak by highlighting new car models that are coming to market rather than talking in detail about cars that are already on sale. In the past, GM had a tendency to promise that prosperity was always just around the corner as it struggled to keep its unwieldy model lineup current.

And in the clay feet of idols department, Liddell let it be known that the finance operation he had taken over was still not up to par. GM was once thought to be in the thrall of the powerful unit, but in the last several years, it became apparent that the finance staff was actually not up to the task, and worse, its work had led to several SEC investigations.

Liddell reported that GM "still had material weakness in financial controls" as of the end of last year. The bad news is that GM still has a long way to go to become competitive in some areas. The good news is that there is lots of room for improvement. 

Source

French President Nicolas Sarkozy said the euro region is ready to rescue Greece should the government struggle to fund its budget deficit, arguing that the country is “under attack” from so-called speculators.

“I want to be very clear: if it were necessary, the states of the euro zone would fulfill their commitments,” he said in Paris yesterday after a meeting with Greek Prime Minister George Papandreou. “There can be no doubt in this regard.” While Greece doesn’t need assistance right now, “we have measures, we are ready, we are determined,” he said.

Sarkozy’s comments are among the strongest by an EU leader to signal the bloc would bail out Greece as they try to warn investors off making further bets against the euro and Greek bonds. Papandreou’s government last week passed a further round of austerity measures and sold 5 billion euros ($6.8 billion) in government debt. Europe’s single currency has dropped 8 percent in the past three months.

“Speculators and the markets should know that solidarity means something and that, if there’s a problem, we are there,” said Sarkozy. “The sooner we say that and the more firmly we say that, the more rapidly we settle the problem.”

The spread between the yield on Greek 10-year bonds and their German counterparts fell to the lowest in three weeks on March 3. Papandreou, who meets President Barack Obama in Washington tomorrow, said he wants a “normalization” in Greek market interest rates after the deficit-cutting steps.

Greece faces more than 20 billion euros in debt redemptions in April and May.

Green Light

Sarkozy wouldn’t say what steps the EU would take and German Chancellor Angela Merkel, who runs Europe’s largest economy, has so far refused to give the green light to any aid package. Merkel said after meeting Papandreou on March 5 that the question of a bailout “‘absolutely doesn’t arise.” Her coalition partner, Guido Westerwelle, said he won’t sign a “blank check” for Greece.

“Nobody can doubt how reluctant the Germans are, and I am starting to think that if official money is needed in May, then there may first be a major discussion between the Germans and the French how to do this,” said Erik Nielsen, chief European economist at Goldman Sachs Group Inc. in London, in an e-mailed note. “It really comes down to some very fundamental issues of how the euro-zone will function going forward.”

European Monetary Fund

German Finance Minister Wolfgang Schaeuble indicated that his government is already thinking about how another Greek crisis can be avoided, saying that the euro region should consider creating an institution similar to the International Monetary Fund.

“We shouldn’t rule anything out, including the creation of a European Monetary Fund,” he said in an interview with the Welt am Sonntag newspaper published yesterday.

The comments come after proposals for a European Monetary Fund were put forward last month by Deutsche Bank AG Chief Economist Thomas Mayer and Daniel Gros, director of the Centre for European Policy Studies in Brussels.

The EMF could ease the disruption caused by the failure of a euro member to pay its bills by offering investors new EMF bonds in exchange for the defaulted securities, they said. Investors would be required to take a “haircut.”

“Setting up a European Monetary Fund is superior to the option of either calling in the IMF or muddling through on the basis of ad hoc interventions,” Mayer and Gros wrote in an article in the Economist last month.

Flaws in the euro region’s governance were also indentified by former Federal Reserve Chairman Paul Volcker, who said in an interview on March 6 that the lack of a political union to back up the European Central Bank is a “structural crack.”

“Maybe fortunately it’s tested with a country as small as Greece, which doesn’t present an insuperable financing problem,” he said.

Source

JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon, whose bank had promised to build a European headquarters in London, told U.K. Chancellor of the Exchequer Alistair Darling a 50 percent tax on bonuses would unfairly penalize the U.S. lender, a person close to the firm said.

Dimon reminded Darling that JPMorgan never took a U.K. bailout and said plans to build a European headquarters at Canary Wharf show the New York-based company’s commitment to London, the person said. JPMorgan, the second-largest U.S. lender by assets, may scrap its Canary Wharf project because of the bonus tax, the Financial Times reported, citing an unidentified bank executive.

Financial firms may face higher costs after Darling said on Dec. 9 he’d impose a 50 percent tax on discretionary bonuses greater than 25,000 pounds ($40,000). European and U.S. regulators imposed pay curbs after the world’s financial firms ran up $1.7 trillion in losses and writedowns during the global crisis.

“Jamie is quite a controlled character, so this is an example of the fury that has been created,” said Stuart Fraser, the head of policy for the City of London, the financial district’s lobby. “There is a real sense of indignation and anger about this tax.”

The tax may apply to compensation for about 20,000 people with the cost imposed on employers. During the call, Dimon, 53, mentioned that JPMorgan has paid U.K. taxes and reminded Darling of plans to spend about $2.4 billion on the Canary Wharf project, according to the person, who declined to be identified because the discussions were private.

U.K. Defends Tax

The conversation with Darling was reported yesterday by the London Telegraph. JPMorgan spokesman David Wells declined to comment. A U.K. Treasury spokesman yesterday defended the tax as fair because it would apply to all banks and said he couldn’t confirm the telephone conversation with Dimon.

“The government cannot allow itself to be blackmailed,” Liberal Democrat Vince Cable said today in an e-mailed statement.

Financial firms are threatening to leave the U.K. because they say increased taxes and regulation make London less attractive. Tullett Prebon Plc, the inter-dealer broker, said it will help employees relocate.

BlueCrest Capital Management Ltd., a London-based hedge- fund firm that oversees about $15.4 billion, plans to open a Geneva office, a person familiar with the situation said last month. As many as 50 of BlueCrest’s 300 employees in London may move, the person said.

Deutsche Bank, Nomura

Deutsche Bank AG CEO Josef Ackermann said on Dec. 12 that Germany has a “comparative advantage” over other financial hubs because it doesn’t plan to tax bonuses. The Frankfurt-based bank said it plans to spread the costs of the U.K. bonus tax to its employees worldwide.

Nomura Holdings Inc., the Tokyo-based bank that bought the U.K. operations of the collapsed Lehman Brothers Holdings Inc., has no plans to reconsider its new City of London headquarters.

Nomura, which in August signed a 20-year lease for a 525,000-square-foot (48,774-square-meter) building overlooking the River Thames, will move into new offices in July, spokesman Patrick Meyer said in London today.

European Alternatives

The bonus levy forced Dimon to consider, “Do we want to be in a more tax-friendly, corporate-friendly environment?” said Jeff Harte, an analyst in Chicago for New York-based Sandler O’Neill & Partners LP. “There are opportunities all over Europe. There are a lot of cities that could handle operation hubs.”

JPMorgan agreed to pay about $349 million in November 2008 for land in London’s Canary Wharf financial district to build a 1.9 million-square-foot (176,500-square-meter) tower.

Under the agreement with Canary Wharf’s owners, who will build the offices, JPMorgan can scale back the size of the project. The planned headquarters will house JPMorgan employees from seven other buildings after the bank scrapped plans to build an office in London’s main financial district.

If construction is delayed or canceled, JPMorgan will have to pay a 76 million-pound fee to developer Canary Wharf Group Plc, according to a November 2008 statement when the deal was announced. The bank will be responsible for paying for completed work including design, planning and infrastructure, the statement said.

Banks’ ‘Sticks’

Shifting business centers elsewhere is “one of the sticks they’ll use to try and fight this legislation, but in the end how realistic is it?” said Joe Sorrentino, managing director at executive compensation consultant Steven Hall & Partners specializing in financial services. “This is a people business. How do you get your talent, if they’re U.K-based, to move to other countries?”

The U.K. Treasury is working with banks to identify employees who are excluded from the tax, and Darling said Dec. 16 he will resist calls to change the policy. Banks can’t avoid the levy by arguing that some activities aren’t defined as banking, he said.

Shares of Songbird Estates Plc, which controlled more than half the buildings in the Canary Wharf estate, were little changed at 157 pence at 3:04 p.m. in London trading. A spokesman for Songbird declined to comment. JPMorgan’s stock fell 4 cents to $41.68 at 12:43 p.m. in New York Stock Exchange composite trading.

“It comes as no surprise that the recent, knee-jerk and ill-thought-out tax grab by government to punish bankers is causing some of our most important institutions to consider their options,” said Mayor of London Boris Johnson. “This should act as a strong wake-up call to our leaders that their policies could seriously threaten our competitiveness.”

Source

Carla Eng, president of Abstract Displays Inc., is one of 11 Ohio businesswomen named Ohio Keys to Success award winners for 2009, the Ohio Department of Development said Monday.

Eng was named a winner in the Marketing/Advertising/Public Relations category – the only winner from Southwest Ohio. She and other winners will be honored Thursday, at an afternoon ceremony at the Vern Riffe Center's Capital Theater in downtown Columbus.

“The department is proud to recognize Ohio’s businesswomen who play a key role in the economic growth and future of our state,” said Lisa Patt-McDaniel, director of the Ohio Department of Development, in a news release.

Abstract Displays, headquartered in Blue Ash, provides exhibits and displays for trade shows and other events low cost payday loans. The company, this year, was named to the Northern Kentucky Chamber of Commerce’s “Emerging 30” list of small businesses with outstanding revenue growth, and was also named a “Torch Award” winner by the Cincinnati Better Business Bureau for marketplace ethics.

The Keys to Success awards are sponsored by the ODD’s Division of Entrepreneurship and Small Business; Ohio Small Business Development Centers; U.S. Small Business Administration; Central Ohio Women’s Business Center; Key4Women/KeyBank; Kroger Co. and the ODD’s Minority Contractors Business Assistance Program.

Source

The U.S. Treasury Department criticized China for the “lack of flexibility” of the yuan and a buildup of foreign-exchange reserves while stopping short of branding the nation a manipulator of its currency.

“The recent lack of flexibility of the renminbi exchange rate and China’s renewed accumulation of foreign-exchange reserves risk unwinding some of the progress made in reducing imbalances,” the Treasury said in its semiannual report to Congress on the currency policies, using another name for the yuan.

The report released yesterday, which found that no major U.S. trading partner illegally manipulated its currency in the first half of 2009, comes after Group of 20 leaders adopted a “framework” for sustaining global growth and reducing lopsided flows of trade and investment. The framework could see China boosting domestic demand, the U.S. saving more and Europe increasing investment.

“Both the rigidity of the renminbi and the reacceleration of reserve accumulation are serious concerns which should be corrected to help ensure a stronger, more balanced global economy consistent with the G-20 framework,” the report said. “The Treasury remains of the view that the renminbi is undervalued.”

China’s foreign-exchange reserves, the world’s biggest, surged in the third quarter as an economic recovery attracted speculative capital and a weak dollar boosted valuations of its yen and euro assets.

Record Reserves

The holdings climbed about $141 billion to a record $2.273 trillion, the People’s Bank of China said this week. That was less than the unprecedented $178 billion gain in the second quarter.

The Obama administration wants China to “pursue policies that permit greater flexibility of the exchange rate and lead to more sustainable and balanced economic growth,” the report said. The U.S. will continue to push China to allow the yuan to appreciate in two-way meetings and through meetings of officials from the Group of 20 nations.

Peoples Bank of China officials have called this year for an alternative to the dollar as a global reserve currency. At the same time, the issue hasn’t been a central point of debate at recent international summits like a meeting of Group of 20 leaders in Pittsburgh last month.

Geithner this year has reiterated the U.S. commitment to a “strong dollar,” and a “special responsibility” to make sure the currency maintains its leading role in the global financial system.

Backing Away

“Both the U.S. and China have backed away from their more strident foreign-exchange positions,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York.

“The U.S. is no longer using nearly every international forum to push for Chinese reforms,” he said. “For its part, China has not pressed with the PBOC musings about the need to replace the dollar.”

Under a 1988 law, the Treasury is required to report to Congress twice a year on international economic conditions and exchange-rate policies. The Treasury is required to enter direct talks with a country deemed to be manipulating its currency, and also seek redress through the International Monetary Fund. The last time a country was branded as a manipulator was China, in 1994.

Yesterday’s report also said that “there are clear signs that the economy is stabilizing” and notes improvement in financial markets and economic growth. Still, “the global economic recovery remains incomplete,” it said.

Source

An overhaul of U.S. financial regulations remains a priority for President Barack Obama and can be achieved this year along with a plan to fix the health- care system, White House economic adviser Lawrence Summers said.

Summers, director of the National Economic Council, said new rules are needed to prevent future financial crises that “have been too large a feature on our economic landscape.”

“This is the year, after what has happened, to overhaul the system of financial regulation,” Summers told reporters today in Washington.

One year after the collapse of Lehman Brothers Holdings Inc. paralyzed credit markets and contributed to the worst recession in more than 70 years, the Obama administration is stepping up efforts to sell a plan sent to Congress in June that rewrite the rules governing the financial system.

Obama will travel Sept. 14 to Wall Street in New York, where he will again make the case for tougher financial supervision, Summers said.

“He did not come here only to respond to crises or to repair that which had recently broken,” Summers said. “He came to address much longer standing economic issues.”

Obama has proposed new regulations overseeing the systemic risk posed by large financial institutions to the financial system, the creation of new government powers to dismantle failed companies and a new agency to oversee consumer financial products.

The financial regulatory proposal has been overshadowed on Capitol Hill by efforts to overhaul the U.S. health-care industry, which have dominated the attention of congressional leaders for much of the past few months.

Health-Care Debate

Summers said it’s possible for Congress to continue work on financial regulations during the health-care debate.

“The president famously said during the campaign that to be president you have to be able to do more than one thing at once,” Summers said. “I think that same idea applies to the 535 members of the Congress.”

The House Financial Services Committee is planning hearings over the next two months on financial regulations followed by committee consideration of legislation later this year. The Senate Banking Committee has held a series of hearings on the issue and its staff is in the process of drafting legislation.

“It is very important to pass financial regulatory reform this year,” Summers said.

Obama has proposed giving more power to the Federal Reserve to oversee large financial institutions, something that faces opposition from lawmakers who blame the central bank for failing to anticipate last year’s financial crisis.

Fed’s Authority

Summers said there are discussions about how much more power to give the Fed without saying how it may interact with other regulators.

“There’s a huge amount of detail in the working-out of legislation of this kind,” Summers said. “We’ve seen the Fed as the natural place for systemic regulation, but systemic risk regulation has a number of elements.”

“Proposals are never enacted as they are first submitted,” he added.

Summers said the unemployment rate of 9.7 percent, the highest in 26 years, is “unacceptably high” and “will on all forecasts remain unacceptably high for a number of years.”

Stimulus Effects

A White House report released Sept. 10 said the $787 billion economic stimulus program has created or saved 1.1 million jobs since its implementation in February. Since the slump began in December 2008, the U.S. has lost 6.9 million jobs.

Summers said the improving economy is helping the government recoup some of the investments it has made through the Troubled Assets Relief Program, with some individual transactions yielding a profit for taxpayers.

Even so, Summers said, “on the overall uses of the TARP I don’t think it would be reasonable to expect profits, in part because some of them are directed at objectives where repayment really isn’t the objective, such as the subsidies to homeowners to avoid foreclosure.”

Source

European Central Bank President Jean-Claude Trichet, who chaired a meeting of central bankers today, said the global economy is showing signs of emerging from its worst recession in more than 60 years.

Latest indicators have been better than anticipated and stabilization is “something which seems to be confirmed at the global level,” Trichet said at a press conference at the Bank for International Settlements in Basel, Switzerland. “It’s not excluded that we would have a bumpy road ahead and of course alertness remains of the essence,” he said.

Central bankers have cut borrowing costs to record lows and injected billions into the financial system after the U.S. housing slump triggered the collapse of Lehman Brothers Holdings Inc a year ago, throwing the global economy into its worst slump since the Great Depression. Governments are also trying to kick- start growth with stimulus packages.

The Organization for Economic Cooperation and Development said on Sept. 3 that the combined economy of the Group of Seven nations will shrink 3.7 percent this year, less than the 4.1 percent contraction it projected in June. The U.S., Japan, Germany and France will all show growth in the current quarter while Canada and the U.K. will continue to shrink, the Paris- based group forecast.

Free Fall Over

“A number of projections had been slightly revised up, confirming that we’re probably, in a large part of the economy, out of the period of free fall,” Trichet said. Still, “we have to remain prudent and cautious.”

Trichet met in Basel with his counterparts from the world’s largest central banks including Bank of Japan Governor Masaaki Shirakawa and China’s central bank governor, Zhou Xiaochuan.

While some policy makers have stressed the need to withdraw emergency measures as soon as the economy improves in order to prevent inflation, the Federal Reserve, the Bank of England, the Bank of Japan and ECB are still in the process of implementing asset-purchase programs in a bid to encourage lending. The ECB on Sept. 3 kept its key rate at a record low of 1 percent after loaning banks as much money as they wanted for 12 months and starting to purchase covered bonds.

Trichet said there’s “a great unity of purpose” among central bankers to deliver price stability. “This unity of purpose doesn’t mean that we do the same because we’re in different situations,” he said.

‘Lessons’

Central banks and governments around the world are seeking tougher regulation after excessive risk-taking by financial institutions sparked $1.61 trillion in losses and writedowns and led to taxpayer-funded bailouts.

The Basel Committee on Banking Supervision yesterday agreed lenders should raise the quality of their capital by including more stock. Financial firms will also have to introduce a leverage ratio and devise ways to boost reserves when the economy is robust, the panel said.

Central banks and governments must “draw all the lessons from the past” in order to ensure that new bubbles aren’t created and “abnormal” risk-taking doesn’t re-emerge, Trichet said.

The Global Economy Meeting is held every two months under the auspices of the BIS, the central bank of the world’s central banks.

Source

Omani inflation slowed to a four year low of 1.8 percent in July, the economy ministry said today, without giving a breakdown of the consumer price index.

The inflation rate fell from 2.9 percent in June, the ministry said on its Web site. Inflation in the Sultanate was last below 1.8 percent in August 2005, according to Bloomberg data compiled from the ministry.

Inflation in the Gulf Cooperation Council has slowed after oil prices plummeted from July 2008’s peak of $147.27 a barrel. The U.S. dollar, to which Oman’s currency is pegged, has also strengthened, making imports cheaper. Gulf states are also seeing a drop in real estate prices, with the most notable decrease in the United Arab Emirates, where prices in Dubai have halved.

The U.A.E. and Qatar will see the greatest reversal in inflation trends from the highest regional rates last year to deflation this year, Monica Malik, an economist at EFG-Hermes, said in a report on Aug. 26.

The GCC is an economic and political bloc including the U.A.E., Saudi Arabia, Kuwait, Qatar, Bahrain and Oman.

Source

German business confidence rose for a fifth month in August, suggesting Europe’s largest economy will gather strength after shaking off its worst recession since World War II.

The Ifo institute in Munich said its business climate index, based on a survey of 7,000 executives, increased to 90.5 from 87.4 in July. That’s the highest reading since September last year. Economists expected a gain to 89, the median of 41 forecasts in a Bloomberg News survey showed. The index reached a 26-year low of 82.2 in March.

Germany’s economy unexpectedly expanded 0.3 percent in the second quarter as improving global trade boosted demand for exports and the government’s 85 billion-euro ($122 billion) package to stimulate domestic spending started to kick in. Bundesbank President Axel Weber said last week that, while he’s “not yet convinced” the recovery can be sustained, third- quarter growth may be “better than thought.”

“The third quarter has all ingredients for another growth surprise,” said Carsten Brzeski, an economist at ING Group in Brussels. “The German economy steered out of recession faster than some pessimists had thought. However, any credit crunching and job shedding are clear speed limits to the recovery.”

The euro rose a quarter of a cent on Ifo’s report before easing back to $1.4308 at 10:50 a.m. in Frankfurt. The yield on the 10-year German benchmark bond fell three basis points to 3.25 percent.

Expectations Jump

Ifo’s measure of expectations increased to 95 from 90.4, while a gauge of current conditions rose to 86.1 from 84.4. Investor confidence jumped to the highest level in more than three years this month and the benchmark DAX share index reached an 11-month high yesterday.

German Chancellor Angela Merkel’s government, which faces a national election in September, is trying to rekindle growth with a spending package that includes tax breaks and a 2,500- euro payment for consumers who scrap their old car and buy a new one. The Economy Ministry has indicated its forecast for a 6 percent economic contraction this year may now be too pessimistic.

“Minus 6 percent is too negative,” Ifo economist Gernot Nerb said in an interview with Bloomberg Television. Rising expectations among exporters indicate manufacturing should improve, he said.

Fiscal Stimulus

BASF SE, the world’s biggest chemical company, said on Aug. 20 that demand is stabilizing and it has fewer employees at its main German plant on shortened working hours.

Volkswagen AG this month raised its full-year sales forecast after the “cash-for-clunkers” program helped spur demand for its Golf and Polo compacts. Deliveries may fall 5 percent this year, half the decline previously estimated, Europe’s largest carmaker said.

“The fiscal stimulus measures expire next year, that’s the problem,” said David Kohl, deputy chief economist at Julius Baer Holding AG in Frankfurt.

The Bundesbank expects unemployment to rise to 10.5 percent in 2010 from 8.3 percent today as companies cut costs to restore profit. That may damp consumer spending and undermine the recovery.

European Central Bank policy makers have stressed the heightened degree of uncertainty over the economic outlook and indicated they won’t rush to withdraw emergency measures to prop up the economy.

The ECB has cut its benchmark interest rate to a record low of 1 percent, flooded banks with cash and started buying 60 billion euros of covered bonds in an effort to revive lending.

“We see some signs confirming that the real economy is starting to get out of the period of freefall,” ECB President Jean-Claude Trichet said at the U.S. Federal Reserve’s annual symposium in Jackson Hole, Wyoming, on Aug. 22. This “does not mean at all that we do not have a very bumpy road ahead of us.”

Source