Global Bonds Gain $132 Billion as Stock Rout Cuts $7.8 Trillion

Bloomberg

By Sarah McDonald - Aug 9, 2011

The worldwide retreat from stocks and commodities following Standard & Poor’s unprecedented cut of the U.S. AAA credit rating has driven the value of the global bond market to a record high.

To Reassure Markets, Europe Needs Bigger Bailout Fund, Says Geithner

By IAN TALLEY And ALAN ZIBEL

WASHINGTON—U.S. Treasury Secretary Timothy Geithner said Europe needs to boost the size of its emergency bailout facility to stem a sovereign-debt crisis threatening to engulf two of its largest economies and push the global economy back into a recession.

NATO investigates deadly Afghan helicopter crash

(Reuters) - NATO tried to determine on Sunday if Taliban insurgents had shot down a troop-carrying helicopter in Afghanistan, killing 38 in the largest loss of life suffered by foreign forces in a single incident in 10 years of war.

ECB Moves to Prop Up Italy, Spain

The Wall Street Journal

By BRIAN BLACKSTONE And MARCUS WALKER

FRANKFURT—The European Central Bank signaled it would purchase government bonds of Italy and Spain on a large scale, in the most dramatic and controversial escalation of its nearly two-year effort to stem Europe's unfolding debt crisis.

G-7 Seeks to Avert Collapse in World Confidence

Bloomberg

By Toru Fujioka - Aug 8, 2011

Group of Seven nations sought to head off a collapse in investor confidence after the U.S. sovereign- rating cut and a slump in Italian and Spanish debt intensified threats to the global economy.

G-7 finance ministers and central bank governors pledged in a statement to “take all necessary measures to support financial stability and growth.” Officials will inject liquidity and act against disorderly currency moves as needed, they said after a call late yesterday European time. The G-20, which includes emerging markets, issued a similar communique.

Trichet Draws ECB ‘Bazooka’ to Stem Contagion

Bloomberg

By Matthew Brockett and Jeff Black - Aug 8, 2011

European Central Bank President Jean- Claude Trichet signaled he’s ready to start buying Italian and Spanish bonds in his riskiest attempt yet to tame the sovereign debt crisis.

In a statement issued in the name of the ECB president after an emergency Governing Council conference call last night, the Frankfurt-based central bank welcomed the two nations’ efforts to reduce their budget deficits and said it will “actively implement” its bond-purchase program. It also called on all euro-area governments to follow through on the steps they agreed to July 21, including allowing the European Financial Stability Facility to purchase bonds on the secondary market.

U.S. Loses AAA Credit Rating as S&P Slams Debt, Politics

Bloomberg

By John Detrixhe - Aug 6, 2011

Standard & Poor’s downgraded the U.S.’s AAA credit rating for the first time, slamming the nation’s political process and criticizing lawmakers for failing to cut spending enough to reduce record budget deficits.

S&P lowered the U.S. one level to AA+ while keeping the outlook at “negative” as it becomes less confident Congress will end Bush-era tax cuts or tackle entitlements. The rating may be cut to AA within two years if spending reductions are lower than agreed to, interest rates rise or “new fiscal pressures” result in higher general government debt, the New York-based firm said yesterday.

S&P Strips U.S. of Top Credit Rating

The Wall Street Journal

Unprecedented Downgrade Comes After Last-Minute Standoff; Treasury Says Decision Is 'Flawed by a $2 Trillion Error'

By DAMIAN PALETTA and MATT PHILLIPS

A cornerstone of the global financial system was shaken Friday when officials at ratings firm Standard & Poor's said U.S. Treasury debt no longer deserved to be considered among the safest investments in the world.

For Euro Zone, Firing All Guns Could Prove Costly

By STEPHEN FIDLER

Europe has dramatically scaled up its efforts to stanch its sovereign-debt crisis since the start of last year, but to no apparent avail as the turmoil threatened this week to overwhelm Spain and Italy.

Yet, governments still have some unused weapons in their armory—though the political cost of firing them will be high.

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.