Category: Global Debt Crisis
The analysis published under this category are as follows.
Tuesday, October 25, 2011
How Difficult Will it be to Solve the Problems of the Eurozone? / Politics / Global Debt Crisis
By: John_Mauldin
Do we need a law that makes it illegal to push a moose out of a moving aircraft? In baseball, what are the odds of a perfect game? How difficult will it be to solve the problems of the Eurozone? These and other issues are meditated upon by Grant Williams in his Things That Make You Go Hmmm… letter, which is this week’s Outside the Box. Maybe it was the baseball set-up (as my Rangers battle the Cardinals in the World Series) or that I keep getting asked about Europe here in New Orleans at the 2011 Oppenheimer Wealth Management Roundtable, but Grant really pulled me through his weekly missive when I got started, and I believe you will enjoy it as well. Long and short, Grant lays out the problems that we face in a very realistic assessment. I will also point out that he makes me look like a euro-optimist.
Tuesday, October 25, 2011
The Real Debt Crisis Contagion Risk / Economics / Global Debt Crisis
By: Dr_Martenson
Around here we like to track things from the outside in, as the initial movements at the periphery tend to give us an early warning of when things might go wrong at the center. It is always the marginal country, weakest stock in a sector, or fringe population that gives us the early warning that trouble is afoot. For example, rising food stamp utilization and poverty levels in the US indicate that economic hardship is progressing from the lower socioeconomic levels up towards the center -- that is, from the outside in.
Monday, October 24, 2011
Global Debt Crisis, What They Are Doing? / Politics / Global Debt Crisis
By: Fred_Sheehan
The Euro and You described a fundamental problem of world finance. The quantity of debt grows as the quality recedes. The problem of bad loans is no longer just the pre-2008 mortgages, CDOs, and LBOs. Debt issued after the bust is defaulting, such as Greek sovereign bonds, issued in June 2010. Some securities are born to part investors from their money, but it's remarkable the extent and variety of such instruments issued in 2011. The world choked on similar bonds and derivatives only three years ago, many of which are still held at false prices on financial institutions' books.
Monday, October 24, 2011
Another U.S. Sovereign Downgrade Likely By 2011 Year End, Says Merrill / Interest-Rates / Global Debt Crisis
By: EconMatters
While some of us are still recovering from the first ever U.S. sovereign credit downgrade from S&P in August, BofA Merrill dropped another bomb. From Reuters,
Read full article... Read full article..."The United States will likely suffer the loss of its triple-A credit rating from another major rating agency by the end of this year due to concerns over the deficit, Bank of America Merrill Lynch forecasts.
Friday, October 21, 2011
QE4, Wall Street and Student Debt Foregiveness / Interest-Rates / Global Debt Crisis
By: Ellen_Brown
Among the demands of the Wall Street protesters is student debt forgiveness—a debt “jubilee.” Occupy Philly has a “Student Loan Jubilee Working Group,” and other groups are studying the issue. Commentators say debt forgiveness is impossible. Who would foot the bill? But there is one deep pocket that could pull it off—the Federal Reserve. In its first quantitative easing program (QE1), the Fed removed $1.3 trillion in toxic assets from the books of Wall Street banks. For QE4, it could remove $1 trillion in toxic debt from the backs of millions of students.
Friday, October 21, 2011
Four Moves to Make Before Greece Defaults / Stock-Markets / Global Debt Crisis
By: Money_Morning
David Zeiler writes:
The very austerity measures that Greece implemented to remedy its sovereign debt crisis have crippled its economy so badly the country is actually sinking deeper into the red, making default all but inevitable.
Already suffering from a four-year-old recession, the Greek economy has been dragged down further by the series of austerity measures - tax increases combined with cuts in pensions and wages. As a result, the Greek economy is expected to contract 5.5% this year and 2.5% in 2012.
Read full article... Read full article...
Friday, October 21, 2011
What Currency Charts Say About European Debt Crisis / Currencies / Global Debt Crisis
By: David_Grandey
We have a pending news driven event out of the EU this weekend or maybe just more extend and pretend. So expect a lot of rumbles into it and of course misinformation and rumors too. What is going to happen is going to happen. We have no clue as to what though with the circus parade over there.
Read full article... Read full article...
Monday, October 17, 2011
For Europe, Breaking Up Is a Hard Thing to Do / Politics / Global Debt Crisis
By: Vitaliy_Katsenelson
Everyone is looking with horror at Europe, waiting for the European Economic and Monetary Union to break up and for the PIIGS to start dropping like flies, taking the rest of the euro zone and the global economy with them. Unlikely!
European monetary union was a great experiment that made a lot of sense on paper. Europe, which had roughly the same size population and economy as the U.S., was at a competitive disadvantage, as dozens of currencies embedded extra transaction costs in cross-border trade and each currency separately had little chance to compete with the U.S. dollar for reserve currency status. Germany — the largest country in Europe and one of the world’s biggest exporters — was at a disadvantage too: The strong deutsche mark made its products more expensive and less competitive in the rest of Europe
Read full article... Read full article...
Saturday, October 15, 2011
ECB Rate Cut: Eyes on Aussies / Interest-Rates / Global Debt Crisis
By: Dr_Jeff_Lewis
Investors sent German government bonds higher, banking on a rate cut from the European Central Bank. Now just days after bullish bond sentiment reached its peak, investors have backed off, realizing that a rate cut might be less likely than once thought.
Rates are already held low by the European Central Bank, which stopped short of actions on a magnitude to mirror the United States. The ECB currently offers a 1.5% rate on its main financing operations, known as fixed-rate tenders.
Read full article... Read full article...
Wednesday, October 12, 2011
The European Crash Dummies Will Hit the Greek Brick Wall / Politics / Global Debt Crisis
By: Gary_North
A crash dummy has some of the physical characteristics of a human being. It is used to test the safety of the interior of a car that has suffered a major accident. A pair of dummies are strapped into the front seat of a car that is on a track. Then the car is run into a wall at high speed. The engineers then examine what happened to the dummies. If the dummies had been human beings, would they have been killed? Dismembered?
Sunday, October 09, 2011
How Long Before The Eurozone Debt Crisis Catastrophic Avalanche Occurs? / Stock-Markets / Global Debt Crisis
By: DK_Matai
1. Time left is limited now, as a number of well placed sources envisage weeks � not months � before the Eurozone crisis deteriorates into a catastrophic avalanche;
2. October 8th is the date the Greeks were expecting to receive 8bn Euros from the IMF-EU-ECB troika to enable payments of wages to public sector workers by mid-October and to maintain public services. This payment has been postponed as the conditions for the bailout and the total sum involved are being recalculated by the troika;
Read full article... Read full article...
Sunday, October 09, 2011
An Irish Debt Haircut / Interest-Rates / Global Debt Crisis
By: John_Mauldin
Just as only four short years ago it was All Subprime, All the Time, and then it was the Credit Crisis, now it is Europe. (When) will Greece default and which banks will implode as a result? Is there another banking crisis in our future? I just came back from a whirlwind four-country visit to Europe, and I will try to offer a few insights. This week we start with Ireland, move to the problem of Europe at large and, if we're not out of space (and your patience!), we'll visit some last-minute data points. There is a lot to cover, so let's jump right in.
Saturday, October 08, 2011
Debt Deflation in Europe and America / Politics / Global Debt Crisis
By: Michael_Hudson
“Without consumption, markets are going to shrink.Companies won’t invest, stores will close, “for rent” signs will spread on the main streets and local tax revenues will fall. Companies will lay off their employees and the economy will shrink more. Why aren’t economists talking about theseeffects of debt deflation, which are becoming the distinguishing phenomenon of our time?Theyadvocategiving more money to the banks, hoping that somehoweverything will be okay, as if the banks would lend out the money to fund new production and employment.Mainstream economics and political leaders in both parties are failing to askwhy the banks are using these giveaways to speculate abroad, pay their managers bonuses and high salaries or to pay dividends rather than to lend to small businesses or do other things to actually get the economy moving again. This phenomenon cannot be explained without seeing that debt service is siphoning off revenue into the financial sector, which is not recycling it back into the production-and-consumption economy.”
Saturday, October 08, 2011
Eurozone Debt Crisis: Disruptions of Financial Markets Worldwide / Politics / Global Debt Crisis
By: Bob_Chapman
Saving the euro, the euro zone and the European Union obviously is far more important to Europe politician’s and their masters than any national interests.
After having lost seven elections in a row the Christian Democratic Union and their partners in Germany still voted 523 to 85 for an extension of money and power to the European Financial Stability Facility, the EFSF. We would say the yes voters stand a good chance of defeat at their next elections, especially when 75% of Germans were at odds with the vote. The big loser was the CDU partner’s, the Free Democratic Party that under the constitution must garner 5% of the vote to stay eligible. The power position of the CDU could well be in jeopardy.
Read full article... Read full article...
Friday, October 07, 2011
Navigating the Eurozone Debt Crisis and Preparing for Greece’s Failure / Interest-Rates / Global Debt Crisis
By: John_Mauldin
Folks, you hear a lot about the eurozone crisis, but what you don't run across very often is a coherent idea on how to move forward. My friends at STRATFOR, a private intelligence company, have done us all the courtesy of saying out loud what everyone else shies away from: Eject Greece from the eurozone.
It's not pretty. It belies the lovely concept of a unified and prosperous Europe. And the worst part: it comes with a big fat price tag, of the 2-trillion-euro variety. But it may be the only way to steer the train before it derails completely.
Read full article... Read full article...
Monday, October 03, 2011
Waiting for Bastiat: The Curse Mutates to Austerity / Politics / Global Debt Crisis
By: Andrew_Butter
The smart-set Claude Frédéric Bastiat called the “sophisticates” are holding their breath, this time waiting for November when there is a glimmer of hope that the plan to make a plan to deal with the Euro-zone banking crisis will distil into a…Plan.
Which is a bit of a turnaround from what the elegant European monetary affairs commissioner Joaquin Almunia pronounced in February 2010…“There is no bailout and no "plan-B" for the Greek economy because there is no risk it will default on its debt”, oh dear, looks like the inevitable is just…inevitable, regardless of what King Canute said.
Read full article... Read full article...
Monday, October 03, 2011
Greek Cabinet to Fire 20% of Public Sector Workers To Meet Troika Austerity Targets / Politics / Global Debt Crisis
By: Mike_Shedlock
Government workers make up 20% of the Greek labor force. Worse yet, most of them cannot be fired for virtually any reason. That is about to change, and it's a much needed change for the better.
However, the idea that it will reduce the budget deficit to required levels by 2012 or even 2014 is ludicrous. When that does not happen larger haircuts will be unavoidable.
Wednesday, September 28, 2011
Greece Debt Crisis Keeps Getting Worse, ECB Will Inflate / Interest-Rates / Global Debt Crisis
By: Gary_North
"The politicians giveth, and the free market taketh away." ~ traditional saying that I just made up.
The Greek government is going to default on its interest payments to the bonehead European bankers and investors who thought that getting high interest rates on Greek debt was a great way to avoid suffering the low-interest rates on German government bonds. After all, Greece would pay interest in euros. No problem!
Read full article... Read full article...
Tuesday, September 27, 2011
Euro-Zone Prepares to Print Trillions in Advance of Greece Debt Default / Stock-Markets / Global Debt Crisis
By: Nadeem_Walayat
It's not just the financial and economic world that's being turned upside down with fast changing events in motion that will impact for many years. Last week saw that maybe energy does not equal mass X the speed of light squared. Eeeek ! There goes Einstein's theory of general relativity and the past 100 years of physics (if true) over the event horizon and into a black hole, though the theory has always had something major missing which is why there existed the fundamental disparity between quantum mechanics and general relativity that maybe we will get much closer towards understanding if E=MC2 is busted.
Monday, September 26, 2011
Euro-zone Debt Crisis Contagion Has Spread / Interest-Rates / Global Debt Crisis
By: Capital3X
A chart is worth a thousand words and therefore we focus on charts and analysis. So with a few introductory words, we will present the charts.
The problem for the policy makers is that risk is being repriced faster than they counteract.The EU banking system is under-strain because they are being denied funding and also deposits are moving elsewhere. The speed of the adjustment is difficult for the banks to maintain their solvency. The confidence virus is a self-reinforcing one that requires an entity to backstop it just as the Fed did it during 2008. The under-capitalised EU banks are being required to de-leverage faster than they can re-capitalise.
Read full article... Read full article...