BBC News
September 20, 2011
Three chunks of news overnight into Tuesday:
Siemens, according to a report in the Financial Times, withdrew over 500m euros from a French bank and stored it with the European Central Bank (ECB), and in total has parked 4-6bn euros at the ECB recently;
Italy got its sovereign credit rating downgraded by Standard & Poor's (S&P);
Greece wrangled with the International Monetary Fund (IMF) about the terms of its bailout money, failing to reach a deal, and opening up Tuesday as a potential decider.
What unites these three stories is the concept of debt dynamics. When you are in debt, the question is not by how much, but whether your economic circumstances are favourable to paying off the loan.
Each of these developments is a negative signal for the debt dynamics of the players involved, and for the eurozone.
Taking Siemens first, it can store money at the ECB because as a global conglomerate, it has a banking licence. Its motives were, clearly, that it did not feel the money safe enough at a major French bank - that is the scale of contagion risk from Greece to Spain.
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