Greek Bond Swap May Be Extended

The Wall Street Journal

By COSTAS PARIS And ALKMAN GRANITSAS

LONDON—Greece's ambitious reform program suffered a double setback Wednesday after it emerged that talks with the country's creditors on a bond swap plan have stumbled and fresh data showed a sharp increase in the budget deficit.

European Stocks Swing Wildly in Volatile Trade

By ISHAQ SIDDIQI

 The Wall Street Journal

LONDON—European stock markets plunged after earlier swinging to positive territory, as worries of another recession in the U.S. and debt contagion across the euro zone hit investor confidence.

The DAX in Frankfurt was recently 4.4% lower and London's FTSE 100 had also dropped 2.5%. The CAC index in Paris had fallen 2.4%.

India’s economy

Reflections of reality

Does India have a bad-debt problem?

Aug 6th 2011 | MUMBAI | from the print edition

The Economist

A RITUAL familiar to students of the subprime and euro crises has started taking place on Indian banks’ conference calls with analysts and investors. The number-crunchers probe the lenders about their exposures to potential bad debts. Bank bosses insist that, although there are niggles, all is under control.

Some scepticism is due. With India’s economy slowing—growth could dip below 8% this year, from a peak of 9-10%—and interest rates rising (see chart), borrowers will be under more strain. India’s banks have been growing fast for years, often a sign that discipline has slipped. Total loans have almost tripled since 2005.

The Reserve Bank of India (RBI), which regulates banks and sets interest rates, has a record of running a tight ship. Gross non-performing loans have fallen from about a fifth of the total in 1995 to under 3% today. But the RBI is neither infallible nor squeaky-clean. Between 2005 and 2008 some foreign banks and several local ones got caught by a mini-boom in unsecured loans to consumers that quickly soured. And since the start of the global financial crisis the RBI has quietly given Indian lenders some get-out-of-jail cards; these may pale into insignificance compared with perks doled out by Western regulators but they suggest that the central bank prefers to fudge the recognition of losses in the system if it thinks stability is at risk.

Obama says he inherited economic problems

Mon, Aug 8 2011

By Jeff Mason

WASHINGTON (Reuters) - President Barack Obama said on Monday he inherited many of the country's problems with high debt and deficits when he entered the White House, sounding a theme likely to dominate his 2012 re-election campaign.

British riots spread on third night of violence

Mon, Aug 8 2011

By Stefano Ambrogi and Mohammad Abbas

LONDON (Reuters) - Rioting and looting spread across London on Monday as hooded youths set buildings and cars ablaze, smashed shop windows and hurled bottles and stones at police in a third night of violence in Britain's worst unrest in decades.

Prime Minister David Cameron cut short his holiday to fly home to tackle the violence, which appeared to be led by youths alienated by years of underemployment which left them feeling marginalized even before the economic downturn.

Downgrade Ignites a Global Selloff

U.S. NEWSAUGUST 9, 2011

Dow's 634.76-Point Plunge Is Worst Since '08 as Worries Rise About U.S. Economy; Asian Markets Drop at Open

By E.S. BROWNING

The downgrade of the U.S.'s credit rating sparked a global selloff on Monday, pushing the Dow Jones Industrial Average to its sharpest one-day decline since the financial crisis in 2008.

Can China afford to downgrade the U.S.?

AUG 8, 2011 10:20 EDT

Reuters

By Joseph S. Nye, Jr.

The opinions expressed are his own.

After the rating agency Standard & Poor’s downgraded America’s long-term debt, China said that Washington needed to “cure its addiction to debts” and “live within its means.” It must have been a delicious moment in Beijing, accustomed over the years to lectures from Washington about its management of the yuan.

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.