Tag: debt crisis

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Even a Slovak ‘Yes’ will make no difference – Telegraph Blogs

Mr Sulik (Slovakia’s speaker of parliament) is right. The EU-IMF rescue loans have not helped Greece pull out of its downward spiral. They have pushed the country further into bankruptcy. Greek public debt will rise from around 120pc of GDP to 160pc under the rescue programme, and the IMF is pencilling in figures above 180pc.

The rescue loans have rotated into the hands of creditor banks, life insurers, pension funds, and even a few hedge funds. ECB bond purchases have allowed to investors to dump their holdings at reduced loss, shifting the risk to EMU taxpayers. It is a racket for financial elites. A pickpocketing of taxpayers, including poor Slovak taxpayers.

“I’d rather be a pariah in Brussels than have to feel ashamed before my children,” he said.

via Even a Slovak ‘Yes’ will make no difference – Telegraph Blogs.

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Euro-Zone Industrial Production Rises – WSJ.com

Industrial production across the 17 countries that share the euro increased at an unexpectedly strong pace in August and for the second straight month.The increase is partly a result of big output increases in Ireland and Portugal, two countries that received bailouts from the European Union and the International Monetary Fund.The European Union’s official statistics agency Eurostat said Wednesday industrial production rose by 1.2% from a month earlier and was up 5.3% from a year earlier.

via Euro-Zone Industrial Production Rises – WSJ.com.

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Merkel, Sarkozy Claim Broad Agreement to Shore Up Banks – WSJ.com

German Chancellor Angela Merkel and French President Nicolas Sarkozy said Sunday that they have reached broad agreement on a plan to shore up Europe’s battered banks and restore stability to the euro zone.Speaking to reporters in the Berlin chancellery ahead of a working dinner as aides and ministers from both governments looked on, Mrs. Merkel and Mr. Sarkozy provided few details of the plan, pledging to unveil a comprehensive solution to the nearly two-year-old euro zone debt crisis by the end of the month. The plan will include a sweeping recapitalization of European banks endangered by a possible sovereign default in Greece as well as changes to existing European treaties to accelerate integration of the 17 euro-zone countries.

via Merkel, Sarkozy Claim Broad Agreement to Shore Up Banks – WSJ.com.

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America’s Debt Crisis: Why Europe Is Right and Obama Is Wrong – SPIEGEL ONLINE

American economists, central bankers and fiscal policy makers have reinterpreted British economist John Maynard Keynes’s clever idea that government spending is the best way to counteract a serious economic downturn — and have turned it into a permanent prescription. In their version of the Keynesian theory, declining growth or tumbling stock prices should prompt central banks to lower interest rates and governments to come to the rescue with economic stimulus programs. US economists call this “kick-starting” the economy.

….The only problem is that this method of encouraging growth has not stimulated the US economy in recent years, but in fact has put it on a crash course. From the Asian economic crisis to the Internet and subprime mortgage bubbles, economic stimulus programs by monetary and fiscal policy makers have regularly laid the groundwork for the next crash instead of encouraging sustainable growth. In the last decade, the volume of lending in the United States grew five times as fast as the real economy.

via America’s Debt Crisis: Why Europe Is Right and Obama Is Wrong – SPIEGEL ONLINE – News – International.

With thanks to Barry Ritholz

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ECB to Wield Anticrisis Tools – WSJ.com

Mr. Trichet said it would be inappropriate for the ECB to lend to Europe’s main bailout vehicle, the European Financial Stability Facility. A number of both U.S. and European politicians—not least the European Union’s Economic and Monetary Affairs Commissioner Olli Rehn—have urged that the EFSF be given a banking license, which would allow it to borrow from the central bank. However, a number of ECB officials have said this would break the terms of the EU treaty on monetary financing of governments. “We consider that governments have all capacity to leverage the EFSF themselves,” Mr. Trichet said. “We cannot substitute ourselves for governments.”

via ECB to Wield Anticrisis Tools – WSJ.com.

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Europe Races to Stem Debt Crisis Amid Rescue Plan for Dexia – WSJ.com

Euro-zone governments suffered a blow Tuesday in their efforts to contain a deepening sovereign debt crisis as one of the Continent’s biggest banks, dogged by fears about its exposure to Greek and Italian debt, was on the verge of a government-backed breakup. Bank executives and government officials zeroed in on a drastic plan to break up Dexia SA, a Belgian-French bank that is one of Europe’s 20 largest in assets.

via Europe Races to Stem Debt Crisis Amid Rescue Plan for Dexia – WSJ.com.

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Follow the Money: Behind Europe’s Debt Crisis Lurks Another Giant Bailout of Wall Street

A Greek (or Irish or Spanish or Italian or Portuguese) default would have roughly the same effect on our financial system as the implosion of Lehman Brothers in 2008. Financial chaos.

….The Street has lent only about $7 billion to Greece, as of the end of last year, according to the Bank for International Settlements. That’s no big deal.

But a default by Greece or any other of Europe’s debt-burdened nations could easily pummel German and French banks, which have lent Greece (and the other wobbly European countries) far more.

That’s where Wall Street comes in. Big Wall Street banks have lent German and French banks a bundle.

via Follow the Money: Behind Europe’s Debt Crisis Lurks Another Giant Bailout of Wall Street – Robert Reich.

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Beginning of the end is near for Greek drama | The Big Picture

After yesterday’s meeting with European Finance Ministers, they are finally facing the reality that the July 21st agreement where Greek bondholders would face just a 21% cut to the value of their bond holdings was just not enough. Said early this morning, Juncker, the European FM head, said “As far as PSI private sector involvement is concerned, we have to take into account that we have experienced changes since the decision we have taken on July 21. These are technical revisions we are discussing.” What he calls ‘technical revisions’ is a nice way of saying a bigger haircut is going to be demanded, something hopefully on the order of 50%+. While bondholders European banks included won’t like it because of a harsher mark, the bonds are already trading at distressed levels.

via Beginning of the end is near for Greek drama | The Big Picture.

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