Investor confidence slumped with a 10 percent decrease in the shares of French banks Monday as reports circulated that Moody’s was planning downgrades due to the banks’ exposure to Greek bonds. [Reuters]
Tag Archives: European debt crisis
German court increases power of parliament in euro crisis
In a landmark case Wednesday, Germany’s highest court gave the parliament an increased role in overseeing euro bailout packages, which may slow down efforts to respond quickly to hard-hit euro-zone countries. The case also ruled out common bonds, which some favored as a way to cut debt. [Reuters]
European markets drop over drawn out euro crisis
European stock markets dropped an average 5 percent over concerns that euro-zone officials are not bringing effective policies to the table. The bloc’s deficit stemming from debt-laden countries requiring bailouts make up roughly 4.5 percent of the zone’s GDP – smaller than the deficit of the U.S. and the U.K. [Wall Street Journal]
Merkel’s cabinet supports revised euro bailout fund
The new plan increases the role of the European Financial Stability Facility in handling the euro debt crisis by raising funds to 440 billion euros or $635 billion and giving it more powers. The Bundestag vote on September 29 in Germany would allow ratification of the EFSF if passed. [Reuters]
Merkel to Resist Growing Pressure for Common Euro Bond
German Chancellor Angela Merkel said that a joint Euro bond is not the solution for the debt crisis at this current moment, stating that each country must resolve its own debt problems before joining together in a common financial policy. Her statement came after her three-week vacation during which European stocks dropped to levels not seen in two years. [Bloomberg]
Merkel, Sarkozy Propose Deeper Fiscal Integration for Eurozone
The two leaders from France and Germany said they would look into creating a leadership position whose responsibility it would be to head the euro zone. The new proposal comes amidst a debt crisis slowly spreading across the 17 countries that are members of the euro community. While there is still resistance to transitioning into a federation of states similar to the U.S., increased economic governance is becoming a key aspect of solving the euro zone’s debt woes. [Wall Street Journal]
Stocks Plummet Amid Fear of French Credit Downgrade
Stock market indexes saw losses near 5% Wednesday in reaction to the European debt crisis and the possibility of a French downgrade. President Sarkozy returned to Paris from his vacation to attend an emergency session addressing the nation’s AAA credit rating. During the meeting he vowed to cut France’s debt but his announcement had little effect on markets, which continued to tumble. [New York Times]
European Leaders Will Gather at G-7 Meeting to Discuss Debt Crisis
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European financial leaders will meet shortly to address the debt crisis that has had investors selling stocks across the board in a frenzy this past week. No details concerning the meeting were given, but it is an indicator that leaders are coming together again to try and find proactive solutions during a holiday month. [New York Times, Photo credit: m_bartosch]
European Central Bank to Pass Measures Preventing Debt Contagion
A 6-month tender will allow European banks unlimited borrowing capacity for six months to ensure fiscal stability as countries such as Italy and Spain threaten the eurozone economy. The Securities Market Program has also been activated in which banks buy government bonds. [Wall Street Journal, Photo credit: graur razvan ionut]
Italians in doubt over Berlusconi’s optimism for economic growth
With ten-year bonds yielding at a record 6+% many European investors are beginning to worry that Italy may succumb to the debt crisis unfolding in the Eurozone. Italy’s Prime Minister Silvio Berlusconi gave optimistic remarks Wednesday to Parliament in Rome regarding Italy’s potential for economic recovery, stating that the country could balance its budget within a year. Many are not convinced by his words. [NYT]
OECD has faith in Greek austerity measure
The Organization for Economic Cooperation and Development, an influential economic think tank released a report suggesting that Greece was on the right track to economic growth and recovery if the eurozone’s two bailout packages were fully implemented. OECD also encouraged the government to continue to remain resolved in its economic reforms. The Greek government has been met with much opposition from its citizens due to tax increases, wage cuts and spending cuts. [Guardian]
Italy and Spain default would devastate EU
Finance officials in Italy and Spain called emergency meetings and delayed vacations to address each countries’ respective debt issues. As countries with larger economies whose debt is owned by many European banks, the stakes for default are much higher than Greece’s debt crisis. [NYT]
Spain put on review for potential downgrade
Moody’s has placed Spain’s bond rating under review for a downgrade Friday after stating that Greece’s bailout package has not contained the European debt crisis. The ratings agency reported that it was concerned about Spain’s economic growth. Spain currently has a rating of AA2. [Reuters]
S&P downgrades Greece’s credit rating to CCC
Greece faced a downgrade from Standard & Poors’ after being cut by Moody’s earlier in the week. The ratings agency believes that the new restructuring plan will cost commercial investors roughly 20% of the value of Greek debts they held previously. [BBC]
Greece’s credit rating downgraded three notches
Moody’s Investors Service downgraded Greece’s long-term foreign currency by three levels to the second lowest rating of Ca, citing that the country’s extensive bailout from its neighboring euro-zone members and the loss facing investors was tantamount to a default. Further reviews will take place after the new debt program is implemented. [Bloomberg]