Europe’s Plan Won’t Cut Greek Debt: Allen, Eichengreen and Evans

Bloomberg

By Peter Allen, Barry Eichengreen and Gary Evans - Aug 4, 2011

Postmortems of last month’s European Union summit meeting have now turned to why the Greek debt rescue failed to restore investor confidence in the country’s finances. Many reasons are advanced: the failure to communicate clearly; the complexity of the plan; the inability to coordinate with the International Monetary Fund.

There’s a simpler explanation: The debt-reduction deal failed because it didn’t reduce the debt.

European Markets Fall

By SIMON KENNEDY

The Wall Street Journal

LONDON—European stock markets ended sharply lower in a volatile session Friday, extending a global selloff, though stronger-than-expected U.S. jobs data helped shares trade above their session lows.

Panic Hits Global Markets

08/05/2011 11:41 AM

German Stocks Fall Sharply

Markets around the world continued to tumble on Friday, responding to concerns of a double-dip recession in the United States and fears that the European debt crisis could worsen. The European Central Bank has begun purchasing government bonds again, and the European Commission is calling for an expansion of the euro rescue fund.

Global financial markets on Friday continued to be rattled over concerns of a double-dip recession in the United States and the continuing European debt crisis. Following heavy losses on Wall Street and Asia on Thursday and Friday, Germany's market opened with stock sales that bordered on panic. Shortly after the opening of trading, the blue chip German DAX index fell by more than 4 percent to 6,152 points, recovering slightly later to a level of 6,220.

EU leaders to hold crisis talks, ECB offers only

6:48am EDT

By Ben Deighton and Andreas Framke

BRUSSELS/FRANKFURT (Reuters) - The leaders of Germany, France and Spain will hold crisis talks about Europe's spiraling debt crisis on Friday after China and Japan called for global policy cooperation following a market rout.

Obama Administration Officials Are Confident Geithner to Stay at Treasury

Bloomberg

By Mike Dorning and Ian Katz - Aug 5, 2011

President Barack Obama’s senior advisers are confident Treasury Secretary Timothy F. Geithner will remain in his job even though he hasn’t made his intentions public, an administration official said.

Geithner met recently with Vice President Joe Biden and laid out his reasons for wanting to leave the post. Biden outlined why it was vital that Geithner remain, said the official, who spoke on condition of anonymity because no announcement has been made.

Europe’s Markets Open Sharply Lower

By Michele Maatouk

European stocks opened sharply lower Friday following the heavy selloff in the U.S. and Asia, amid growing concerns about euro-zone sovereign debt and the U.S. recovery, and ahead of the release of nonfarm payrolls.

Merkel, Sarkozy to Discuss Euro-Zone Situation

The Wall Street Journal

By Bernd Radowitz

German Chancellor Angela Merkel will later Friday talk to French President Nicolas Sarkozy over the telephone, with the “current situation in the euro zone” among the issues to be discussed, a spokesman for Ms. Merkel said Friday.

The euro crisis, part 394

Rearranging the deckchairs

The markets once again are calling euro-zone leaders’ bluff. Time to get ahead of things

The Economist

Aug 6th 2011 | from the print edition

WHATEVER plans European leaders had made for their holidays are being disrupted by an adversary that never takes a break: the bond markets. A fortnight after yet another summit in Brussels to resolve the euro zone’s debt saga, the pressure on Greece, Ireland and Portugal—the three minnows to have been bailed out by Europe and the IMF so far—has eased. But the strains on far-bigger Spain and Italy are rapidly worsening. The extra interest that both countries pay to borrow for ten years compared with Germany rose to euro-era records this week. Shares in Italian banks, stuffed with domestic government bonds, are being pounded on a daily basis.

Time for a double dip?

The Economist

A lousy debt deal, rising fears of a recession, the danger of longer-term stagnation: America’s outlook is grim

THIS ought to have been a good week for the American economy. The country’s leaders at last ended a ludicrously irresponsible bout of fiscal brinkmanship, removing the threat of global financial Armageddon by agreeing to raise the federal debt ceiling. Yet far from heaving a sigh of relief, investors are nervous. Stockmarkets around the world have tumbled. On August 2nd, the day the debt deal was signed, the S&P 500 index saw its biggest one-day fall in over a year, and yields on ten-year Treasury bonds dropped to 2.6%, their lowest level in nine months, as investors sought safety

French Court Orders Investigation of Lagarde

By WILLIAM HOROBIN, NOEMIE BISSERBE and DAVID GAUTHIER-VILLARS

PARIS—A French criminal court Thursday ordered a probe into whether International Monetary Fund chief Christine Lagarde was complicit in any misuse of public funds in 2008, when she was France's finance minister.

ECB Reactivates Anticrisis Measures

The Wall Street Journal

By GEOFFREY T. SMITH

LONDON—The European Central Bank reactivated two of its most potent anticrisis measures Thursday in an attempt to stop the debt crisis from reaching Spain and Italy.

Stocks Tumble as Signs Point to Weak Global Economy

 The New York Times

The stock market fell sharply Thursday on intensifying investor fears about a slowdown in global economic growth and worries about Europe’s ongoing debt crisis, which is centered now on Italy and Spain.

As Japan intervened to weaken its currency and European stock markets turned negative across the board, United States stocks fell by around 3 percent in morning trading in New York.

Emerging vs developed economies

Power shift

Aug 4th 2011, 17:34 by The Economist online

The emerging world begins to seize the lion's share of global markets

REAL GDP in most rich economies is still below its level at the end of 2007. In contrast, emerging economies’ output has jumped by almost 20% over the same period. The rich world’s woes have clearly hastened the shift in global economic power towards the emerging markets. But exactly how big are emerging economies compared with the old developed world? This chart looks at a wide range of indicators:

Euro crisis: Barroso warns debt crisis is spreading

BBC News

European Commission President Jose Manuel Barroso has warned that the sovereign debt crisis is spreading beyond the periphery of the eurozone.

In a letter to European governments, he called on them to give their "full backing" to the euro currency zone.

He also said governments should rapidly re-assess the European Financial Stability Fund (EFSF) to reduce the risk of contagion in the eurozone.

Bond spreads in the euro zone

The single currency's medical chart

Aug 3rd 2011, 18:31 by The Economist online

THE euro zone's disease has taken a strange turn since the last summit on July 21st. The medicine that leaders prescribed immediately improved the situation of countries in the emergency room, ie, Greece, Ireland and Portugal, which have all received bail-out loans. But it worsened the condition of those outside hospital who had started to fall ill.

Euro Problems Need Fixing Before Financial Markets Lose Their Faith: View

By the Editors Aug 4, 2011 3:00 AM GMT+0300

Bloomberg

The U.S. Congress may have narrowly avoided a government-debt disaster, but financial troubles are resurging across the Atlantic. If European leaders can’t find the political will to implement the drastic measures needed to stem their crisis, markets could soon put them in an untenable position.

Italy's Woes Weigh on Europe

Prime Minister Resists Calls for New Measures, Anxiety Spreads Across Continent

By STACY MEICHTRY, CHARLES FORELLE and DAVID ENRICH

ROME—Italian Prime Minister Silvio Berlusconi resisted calls for a swift economic overhaul, heightening worries that the world's eighth-largest economy is sliding into the sort of debt distress that has laid low its smaller European neighbors.

World debt guide

Owe dear

Jul 28th 2011, 13:05 by The Economist online

Our interactive graphic shows how deeply in hock we all are THE headlines are all about sovereign debt at the moment. But that is only part of the problem. Debt rose across the rich world during the boom, from consumers maxing out credit cards to financial firms taking on more leverage, and the process of reducing it is still at a very early stage.

U.S. Debt-Ceiling Agreement Is an Alarming Bipartisan Mess: View

Bloomberg

The deal reached by the U.S. Congress to raise the $14.3 trillion debt ceiling has spared the nation an immediate catastrophe while potentially setting a path for longer-term disasters.

Financial markets’ initial euphoria over the deal faded quickly. The S&P 500 index of U.S. stocks declined for the sixth day in a row, losing 0.4 percent Monday to close at 1,286.94. The dollar gained against the euro and the yen but declined to a record low against the Swiss franc.

Gold Rallies to Record for Second Day as Signs of Slowdown Fire Up Demand

Bloomberg

By Pham-Duy Nguyen and Nicholas Larkin - Aug 3, 2011 5:35 PM GMT+0300

Gold rose to a record $1,675.90 an ounce in New York on signs that the U.S. economy is faltering amid debt woes, boosting demand for the precious metal as an investment haven.

Moody’s Investors Service said the U.S. credit rating may be downgraded and yesterday placed the country on negative outlook after President Barack Obama signed into law a plan to lift the nation’s borrowing limit and cut spending. Gold priced in euros also reached a record on concern that slowing growth will hamper efforts by Spain and Italy to trim debt.