JOSEF ACKERMANN, the head of Deutsche Bank, combines a silky manner with blunt words. When the German government set up a bail-out fund to stabilise the country’s banking system, he said he would be “ashamed” to use it. When Europe and the IMF bailed out Greece, Mr Ackermann said he doubted it would pay back the loans. And when regulators and economists say that big banks should be broken up, with “casino” investment banks split off from “utility” retail banks, Mr Ackermann retorts that “smaller banks will not make us safer.”

Is the global economic recovery still on track? The mainstream view is: yes, without a doubt. But increasingly, there are increasingly reasons to fear another financial disruption – particularly given the latest developments in Ireland.

September and October hold bad news for stock markets and banks remain overleveraged as we head into the second leg of the financial crisis according to Pedro De Noronha, the managing partner at Noster Capital in London. "We are seeing one of the most challenging years for investors ever," De Noronha told CNBC Tuesday. "Major investors are simply leaving the market. When it looks like markets are about to fall off the cliff they rally and vice versa. "There are problems coming from the resetting of US mortgages and (the) euro area remains a big worry," he said.

As a consequence of the decision by the Swedish Financial Supervisory Authority (Finansinspektionen) to revoke all HQ Bank's licences, the board of HQ Bank has during the weekend actively sought a private solution with a party holding an existing banking licence that would allow the operations to continue to be conducted.

U.S. Federal Reserve Chairman Ben Bernanke said on Friday the recovery has softened more than expected and the Fed is ready to take further steps if needed to spur the stumbling economy. "The committee is prepared to provide additional monetary accommodation through unconventional measures if it proves necessary, especially if the outlook were to deteriorate significantly," he said in remarks prepared for delivery at a Fed conference in Jackson Hole, Wyoming.

German 30-year government bond yields were near a record low on speculation Federal Reserve Governor Ben S. Bernanke will signal today his willingness to increase purchases of Treasuries. Ten-year yields were within six basis points of the lowest on record before a report forecast to show German consumer price growth stalled in August. The U.S. economy grew more slowly than initially estimated, a report from the Commerce Department will show, according to the median estimate of 81 economists in a Bloomberg survey. Bernanke is scheduled to speak at 3 p.m.

From the Forbes: “WATCH OUT FOR THE QUANTS,” a column I wrote in February, 2008, warned that computer driven buy and sell orders were dangerously fragmenting the marketplace for stocks. Dan Mathisson, Credit Suisse head of advanced execution services, told me then; “More and more of the world’s trading is done by spraying dark orders across multiple destinations by using deliberately complicated patterns and algorithmic models that can’t be discovered or duplicated. No one knows who’s doing what to whom anymore.”

Standard & Poor's defended on Wednesday its downgrade of Ireland's long-term credit rating and said its estimate of a 35 billion euros bill for bailing out nationalised lender Anglo Irish was conservative. "Our previous estimate had been overshot by a wide margin, we are hoping that this, which is still a relatively conservative estimate with regard to Anglo will not be overshot again," analyst Trevor Cullinan told state broadcaster RTE.

Nobel laureate Joseph Stiglitz is on the tapes saying that with all deference to the blowout Q2 German GDP data, the continent is facing growing recession risks amid the radical cutbacks in government spending. Bank of England official Martin Weale pretty well told the London-based Times the same thing about the U.K. economic outlook.

Sales of previously owned U.S. homes dropped more steeply than expected in July to their lowest pace in 15 years, an industry group said Tuesday, implying further loss of momentum in the economic recovery. The National Association of Realtors said sales dropped a record 27.2 percent from June to an annual rate of 3.83 million units, the lowest level since May 1995. June's sales pace was revised down to a 5.26 million-unit pace. Analysts polled by Reuters expected existing home sales to tumble 12 percent to a 4.70 million-unit pace from the previously reported 5.37 million units in June.

Andrew Lilico, chief economist at the influential Policy Exchange think tank, has warned of an interest rate environment not seen since the 1990s. He said the rise could happen as the recovery beds in and Government measures to stave off a recession lead to an explosion in the money supply. Mr Lilico also warned of a return to "boom and bust", as ballooning inflation threatens to tip the economy back in to recession in 2013 or 2014.

Big US banks should be able to meet tighter global capital requirements without having to raise substantial amounts of new equity, according to calculations by Barclays Capital.

The analysis by BarCap’s debt capital markets group estimates that the 35 largest US banks will have to come up with half as much new capital as had been expected following last month’s rewrite of proposed requirements by the Basel Committee on Banking Supervision

The Financial Stability Board (FSB) and Basel Committee on Banking Supervision (BCBS) today published reports prepared as inputs to the calibration of the new bank capital and liquidity standards and to inform the transition arrangements for implementation of the new standards. 

The recovery continued in the United Kingdom, with output growth across the first half of 2010 close to its historical average. But the level of economic activity remained well below its pre-crisis peak. The revival in the world economy also proceeded, albeit unevenly. The UK recovery is likely to continue, underpinned by the considerable monetary stimulus, further growth in global demand and the past depreciation of sterling. But the risks to growth remain weighted to the downside.

By Ian Fraser, published in yesterday's Sunday Herald