Deflation in Eurozone is considered as a real and big problem. ECB officials are willing to consider dramatic steps to fight against it, suggesting that the bank is prepared to use negative interest rates or direct purchases of government or private-sector debt. Even the Bundesbank chief Jens Weidmann was not as strong as we are accustomed and he admitted that these uncongenial measures need at least discussion about their effectiveness and also about their costs and side effects. He is more in favor for negative interest rates as for direct purchases. This could be a big shift in the future policy of the ECB.

Ukraine will need up to 27 billion bailout package which will consists of 14 – 18 billion loan from IMF and the rest will be provided by the US and EU. The agreement is tied to tough reform conditions. But who knows? Ukraine is in a quite different position as Greece and could blackmail their new western allies with Russian card. But for now it seems that everybody is feeling well and another country is saved.

Separatist’s movements are spreading within the Europe. The last examples are come from Italy where last week Venice referendum showed up that more than 80 % of voters are willing to leave Italy. The island of Sardinia plans to hold an online referendum on independence from Italy in the same way as Venice region. A group of activists demand also to sell the island to Switzerland because they do not agree with the policy of the country. The referendum will not have any legal power and if so it could be easily declared by law and judicial system as un-constitutional as happened in Spain where Spain’s Constitutional Court null planned referendum in Catalonia.

There are more and more stories from China which describe difficult situation on local credit market. Banks become more selective about whom they lend. Interests for some companies are more than 10 % and obtaining loan is getting difficult and expensive. Banks are becoming more aware of the fact that authorities will not safe all debtors. Officials have indicated publicly that they believe other defaults are inevitable but do not believe such incidents will lead to systemic risk. This forces many companies to find capital in shadow banking where higher interests are. And ordinary Chinese have become aware of anxiety among investors as regulators signal greater tolerance for credit defaults. It was only some rumors which triggered bank run on two small Chinese banks in Yandong which caused that hundreds of people rushing to withdraw money from them. And this is not common behavior in China. Bank failures are virtually unknown here because banking sector is considered to operate under an implicit guarantee from the government.

According to the series of research papers the larger financial institutions can do better business, as well as withstand sudden fluctuations in the markets compared to smaller banks. Why is so you ask? The answer is quite simple. The bigger banks enjoy “too-big-to-fail” status. Everybody would be more than happy to make “miraculous profits and business” backing the back by taxpayer´s money. And despite the fact that the Obama administration is willing to shrink the size of US banks, the exact opposite trend has appeared. The top-10 banks in America now have combined assets of about $9.72 trillion dollars and first five of them JPMorgan Chase, Bank of America, Citigroup (which did not pass last stress tests imposed by FED) and Wells Fargo – possess about $7.8 trillion in assets. This is maybe the reason why the most known CEO Jamie Dimon was rewarded last week by the board he chairs, receiving a 74 percent pay raise to $20 million. Opposite site of the country have other problems. Wal-Mart Stores reported among usual warnings about risks of their business model food stamps issue for the first time in history. It is quite logical because company is focused on the lower class of the US population but it also means that lower population of the US is fully dependent on social food stamp program and it describes social situation in US. The US are not so joyful as were a decade ago.

Matúš Pošvanc