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May 8, 2009
EXECUTIVE SUMMARY
- Stress tests single out ten banks; scramble for raising capital ensues.
- Pope Benedict begins Mideast trip.
- Displaced persons continue to pour out of Pakistan's Swat Valley as fighting continues.
- Venezuela announces seizure of foreign firm assets.
Top of the Agenda: Stress Test Findings
U.S. regulators yesterday revealed estimates that the nation's top nineteen banks could suffer losses of up to $599 billion if the economy fares worse than expected, and ordered ten banks to raise a combined $75 billion as a capital cushion (WSJ). http://m1e.net/
The estimates, which came as the result of the series of "stress tests" the government carried out to assess the health of the biggest U.S. banks, set off what the Financial Times calls a "frenzy of activity" as the ten banks singled out as needing more capital scrambled to announce their plans for raising that money. http://m1e.net/
The FT article also notes that the $75 billion number is significantly lower than a similar assessment U.S. regulators put forth in 2008, in which they said banks would need an additional $185 billion.
Background:
- The FT has a graphic showing how different banks fared in the tests. http://m1e.net/
Analysis:
- Writing in the New York Times yesterday, U.S. Treasury Secretary Timothy Geithner defended the structure of the tests, saying some analysts will argue the tests were overly punitive and others will say they were too easy on the banks, but that regulators attempted to strike an appropriate balance. http://m1e.net/
- CFR's Sebastian Mallaby, writing in the Washington Post, says the effect the calming stress tests have had on markets points to some ideas for longer-term reforms. http://m1e.net/
- Reuters, in a news analysis piece, says reality is likely to bite bank bondholders once euphoria surrounding the tests has cooled. http://m1e.net/
MIDDLE EAST: Pope Mideast Trip
Pope Benedict XVI today begins a weeklong trip he has described as a pilgrimage of peace to the Middle East (BBC). http://m1e.net/
This new Backgrounder profiles relations between the Vatican and Israel. http://m1e.net/
ISRAEL-U.S.: Haaretz reports officials in Jerusalem are concerned that relations between the United States and Israel may be cooling since the inauguration of U.S. President Barack Obama and Israel's new Prime Minister Benjamin Netanyahu. http://m1e.net/
PACIFIC RIM: China-EU Meetings
At high level economic meetings between Chinese and EU officials, Beijing said it would continue to treat Europe as a favored trading partner and stressed that the two sides should work together to stave off protectionism (Xinhua). http://m1e.net/
KOREAS: South Korea's former President Kim Dae-jung, who initiated the "Sunshine Policy" aimed at easing relations between North and South Korea, will press for the policy to be revived in meetings with U.S. envoy Stephen Bosworth, the Korea Times reports. http://m1e.net/
CFR's Crisis Guide explains the policy in the context of the history of tensions between the countries. http://m1e.net/
SOUTH & CENTRAL ASIA: Pakistan's Displaced
The BBC reports some 200,000 Pakistanis have now fled the Swat Valley as fighting there between government troops and the Taliban intensifies. http://m1e.net/
Dawn looks at the state of the Pakistani military's massive campaign against the Taliban in Swat. http://m1e.net/
SRI LANKA: Al-Jazeera reports Sri Lankan troops have seized additional territories from Tamil Tiger rebels in northern Sri Lanka. http://m1e.net/
AFRICA: Sudan Aid
The BBC reports Sudan has invited decided to invite some new aid groups to work in its Darfur region, weeks after having expelled aid groups from the country, and that the country's government is also allowing some existing aid groups to expand their presence. http://m1e.net/
NIGERIA: The Lagos Vanguard reports Nigeria is experiencing sharp fuel shortages and that the country's government sees no immediate respite in sight. http://m1e.net/
AMERICAS: Venezuela's Oil Seizures
The Wall Street Journal reports Venezuela's President Hugo Chavez is moving to seize some local assets of international oil services companies operating in Venezuela. http://m1e.net/
MEXICO: The Mexican paper The News reports on business and cultural life in Mexico City as the city attempts to open back up following its swine flu outbreak. http://m1e.net/
EUROPE: EU Gas Options
The European Union is bringing together potential natural gas providers from the Middle East and Central Asia as it attempts to diversify its supply chains (BBC). http://m1e.net/
RUSSIA: The Moscow Times looks at the recent surge in stock markets in Russia, which has brought market indices to seven-month highs. http://m1e.net/
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