"If you're going to panic, do it fast and beat the crowd." ~ Jesse Livermore

Thursday, October 11, 2012

Eurozone back to the brink?

Back to the Brink for the Eurozone? by Kemal Dervi┼č - Project Syndicate: ". . . Indeed, the deflationary spiral, particularly in Greece and Spain, is causing output to contract so rapidly that further spending cuts and tax increases are not reducing budget deficits and public debt relative to GDP. And Europe’s preferred solution – more austerity – is merely causing fiscal targets to recede faster. As a result, markets have again started to measure GDP to include some probability of currency re-denomination, causing debt ratios to look much worse than those based on the certainty of continued euro membership. While all of this is happening in Europe’s south, most of the northern countries are running current-account surpluses. Germany’s surplus, at $216 billion, is now larger than China’s – and the world’s largest in absolute terms. Together with the surpluses of Austria, the Netherlands, and most non-eurozone northern countries – namely, Switzerland, Sweden, Denmark, and Norway – northern Europe has run a current-account surplus of $511 billion over the last 12 months. That is larger than the Chinese surplus has ever been – and scary because it subtracts net demand from the rest of Europe and the world economy. . . "

S&P downgrades Spain's credit rating - Telegraph: "Rating agency Standard & Poor's has downgraded Spain's credit rating by two notches, warning that the deepening economic recession is limiting the government's options."


Why the IMF has got it so hopelessly wrong on the euro crisis - Telegraph: "David Cameron and George Osborne are not for turning, but the International Monetary Fund is plainly made of flimsier stuff. The latest flurry of economic analysis from the IMF – to coincide with the annual meeting in Tokyo – has revealed a not so subtle change of heart over fiscal austerity."


MARKET COMMENT: Europe Stocks Drop as IMF Warns Over Debt Crisis
Wall Street Journal
LONDON (Dow Jones)--European stock markets dropped Wednesday, as the International Monetary Fund issued a warning about the impact of the euro-zone debt crisis and as Greece's equity benchmark retreated 3.5%. The Stoxx Europe 600 index lost 0.6% to 268 ...

IMF fears 'credit shock' in Spain if Rajoy blocks rescue - Telegraph: "The International Monetary Fund has issued a veiled warning that Spanish bond spreads could surge to a record 7.5pc and push the country into a deeper crisis if premier Mariano Rajoy continues to drag his feet on a bail-out request."

European Stocks Fall for Third Day
Wall Street Journal
LONDON—European stock markets dropped, as the International Monetary Fund issued a warning about the impact of the euro-zone debt crisis and as Greece's benchmark skidded 3.5%. Investors also trained their focus on the failure of a proposed merger ...

Debt crisis: as it happened - October 10, 2012 - Telegraph: "Klaus Regling, head of Europe's new bailout fund, says Spain does not look like it's about to seek a rescue package because yields on its sovereign bond are falling, as the IMF called for euro action to avert global catastrophe."

Re-profiling To Exit The Debt Crisis
Wall Street Journal (blog)
Re-profiling To Exit The Debt Crisis. Article · Comments · Real Time ... In their latest paper on theeuro zone–a short note published on Tuesday–the two go through the options that euro-zonestates facing debt pressures have. The preferred scenario ...

Gold flat as stimulus buying fades, euro zone eyed
Reuters
NEW YORK (Reuters) - Gold traded flat on Wednesday, as renewed fears about a worsening euro zone debt crisis along with wider concern about the global economy dampened the metal's allure as a traditional inflation hedge. Analysts said that some ...

FOREX-Euro flat vs dollar as investors await Spain decision
Reuters
The mechanism is aimed at reducing borrowing costs for debt-ridden countries, thus easing the euro zone's financial crisis. The euro has rallied 7 percent since hitting a two-year low of $1.2040 in late July after the European Central Bank head Mario ...

US Stock Futures Slip as Euro-Zone Worries Continue to Weigh
Wall Street Journal
Fitch Ratings said euro-zone members could suffer further credit downgrades, citing major risks including the region's debt crisis and a slowdown in China. In addition, the International Monetary Fund warned that if euro-zone governments fail to solve ...

Global Household Assets Slip in 2012 On Euro-zone Woes -Report
Wall Street Journal
ZURICH--The average assets of private households around the globe slipped this year for the first time since the outbreak of the financial crisis in 2007, due to the uncertainty caused by the ongoingdebt crisis in the euro zone, according to a study ...

European Shares Slip After IMF Report
New York Times
In its report the I.M.F. said that, while rising imbalances elsewhere around the globe were a concern, “ further deterioration in the euro area crisis is the biggest risk to global financial stability.” The report also underlined the growing gap ...

U.S. Stocks Mixed; Focus on Euro-Zone
NASDAQ
Beyond earnings, the International Monetary Fund warned that if euro-zone governments fail to solve the debt crisis, the region's banks could be forced to sell as much as $4.5 trillion worth of assets, up from an earlier estimate of $3.8 trillion ...

Thomson Reuters | Euro Zone-ready Solutions
Through our Euro Zone news, insights and analysis we can help you get to the ... a broad range of issues—whether you want to analyze the Greek debt crisis ...
thomsonreuters.com/news.../meeting_euro_zone_challenges/

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