MidnightWatcher – Prophecy in Motion

“Europe’s top financial watchdog warned on Tuesday that the eurozone’s sovereign debt crisis has become systemic and threatens global economic stability unless decisive action is taken urgently.

European Central Bank President Jean-Claude Trichet issued the dramatic warning as chairman of the European Systemic Risk Board, created to avoid a repeat of the 2008 financial crisis, amid growing fears that Greece will default on its massive debt.

‘The crisis is systemic and must be tackled decisively,’ Mr Trichet told a European Parliament committee in his final appearance before retiring at the end of the month.

‘The high interconnectedness in the EU financial system has led to a rapidly rising risk of significant contagion. It threatens financial stability in the EU as a whole and adversely impacts the real economy in Europe and beyond.’

European banking regulators meanwhile asked banks across the continent to provide updated data on their capital position and sovereign debt exposures to help reassess their need for recapitalisation.

Germany and France, the leading powers in the 17-nation euro zone, have promised to propose a comprehensive strategy to fight the debt crisis at an EU summit delayed until October 23.” Read more.

S&P downgrades Spain’s banking sector – “Standard & Poor’s Tuesday downgraded 10 Spanish banks by one notch, including giants Santander and BBVA, warning that the country’s banking sector will further deteriorate in the next 15 to 18 months. The outlook on all Spanish financial institutions S&P rates is now negative, reflecting the possibility of further downgrades if the economy slows down more than anticipated. The agency, which rates Spain at AA-minus with a negative outlook, forecast the level of troubled assets in the country’s banking system will continue to rise throughout 2012 and possibly into early 2013 given a sluggish real estate sector.” Read more.