Greece Won’t Default, Yet

The Wall street Journal

Germany has been a rich source of saber rattling over Greece, much of it for domestic political consumption.

In the end, Germany will have to give in and let Greece have its September bailout installment, giving Athens until the next tranche in December to see if its new taxes can work off a dangerously widening budget deficit.

Senior IMF officials now acknowledge as much, sympathizing with the headwinds Greeks face with their economic recession. The alternative is too terrible to contemplate, with crumbling European credit markets in recent days giving only a pale hint of what a Greek default would wreak.

Greek default jitters hammer French banks, euro

(Reuters) - Growing fears of a Greek default sent a hurricane through heavily exposed French banks on Monday and hit the euro as investor confidence in the European currency area's ability to surmount a sovereign debt crisis ebbed.

Bad News Could Force Some Real Decisions

The Wall Street Journal

Sometimes the really bad news is good.

Jürgen Stark's decision to resign from the board of the European Central Bank, not too long after Axel Weber quit as Bundesbank president, just might put paid to the dithering that has characterized euro-zone policy making for too long. And the equally disturbing news that the Greek economy is in virtual collapse, shrinking by 7.3% in the last quarter, puts more than a little pressure on euro-zone politicians to abandon the notion that press releases are synonymous with action, and austerity with prudence.

Supercomputer predicts revolution

BBC

Feeding a supercomputer with news stories could help predict major world events, according to US research.

A study, based on millions of articles, charted deteriorating national sentiment ahead of the recent revolutions in Libya and Egypt.

Europe's Markets Slump

The Wall Street Journal

By TOBY ANDERSON

LONDON—European stocks opened sharply lower Monday amid deepening concerns about a possible Greek default, while the euro slumped to a 10-year low against the safe-haven yen.

London's FTSE 100 index was 1.9% lower at 5114.72, Frankfurt's DAX index dropped 2.5% to 5061.87 and the CAC-40 index in Paris fell 3.3% to 2875.28.

Greece Announces New Tax as Unrest Flares

The Wall Street Journal

Property Levy Aims to Close Budget Gap

THESSALONIKI, Greece—The Greek government said Sunday it will impose a new property tax to cover a €2 billion ($2.7 billion) shortfall in budget targets this year, which it has promised its international creditors in exchange for receiving fresh aid.

Making Strength of Zone's Weakness

The Wall Street Journal

Common Euro Bond Issue, Opposed by Many Leaders, Could Create an Investor Haven

The world is short of secure destinations for investment funds, as shown by Switzerland's dramatic efforts this week to deter the floods of capital entering the Alpine safe haven. Here's a solution: euro-zone bonds, debt instruments issued collectively by euro-zone nations that could offer for the first time a real alternative to the U.S. Treasury market. They have another advantage: They could also save the euro zone.

Libyan interim leader Abdul Jalil flies to Tripol

11 September 2011 Last updated at 04:43 GMT

BBC

The head of Libya's interim government, Mustafa Abdul Jalil, has flown to Tripoli for the first time since anti-Gaddafi forces captured the capital.

Mr Abdul Jalil was greeted by hundreds of cheering, flag-waving supporters.

Until now he had remained in the eastern city of Benghazi. His presence in the capital is aimed at sending a message about his authority.

Germany Nominates Asmussen to Succeed Stark at ECB

The Wall Street Journal

By GEOFFREY T. SMITH

MARSEILLE, France—The German government has nominated Jörg Asmussen to succeed Jürgen Stark on the executive board of the European Central Bank, Finance Minister Wolfgang Schaeuble said Saturday.

At a news conference after weekend meetings of the finance ministers and central-bank governors of the Group of Seven leading industrialized nations, Mr. Schaeuble said he hoped that Mr. Asmussen would be able to assume Mr. Stark's duties toward the end of the year.

Greek Leader Vows To Press Changes

The Wall Street Journal

By ALKMAN GRANITSAS

THESSALONIKI, Greece—Prime Minister George Papandreou vowed Saturday that the country would meet its budget targets and press ahead with difficult reforms, even as thousands demonstrated against those reforms on the streets of Greece's second largest city.

ECB Lowers Growth Forecast

The Wall Street Journal

By TOM FAIRLESS

FRANKFURT—European Central Bank President Jean-Claude Trichet warned Thursday that the euro zone's economy will grow more slowly than previously expected, and said risks to medium-term inflation have moderated.

But he stopped short of clearly signalling a change in the bank's interest-rate path.

Switzerland Caps Franc

The Wall Street Journal

By DEBORAH BALL

LONDON—The Swiss National Bank set a limit on how far it will let the Swiss franc rise against the euro, the bank's most aggressive attempt yet to rein in the soaring currency.

Turkey Suspends Defense Trade With Israel

The Wall Street Journal

By MARC CHAMPION

ISTANBUL—Turkey's prime minister, Recep Tayyip Erdogan, said Tuesday that his country was suspending defense trade with Israel and that Turkish naval vessels would be seen in the Eastern Mediterranean more often, as Ankara ratcheted up pressure in a rising dispute with its former ally.

Speaking to reporters in Ankara after giving a speech at the Ankara Chamber of Commerce, Mr. Erdogan repeated plans announced Friday to downgrade diplomatic relations with the Jewish state and suspend military agreements, specifying that the suspension would include trade in defense goods.

Roubini: Slowdown Brings Forward New Financial Crisis

Bloomberg

By Scott Hamilton - Sep 6, 2011 7:28 PM GMT+0300

Nouriel Roubini, co-founder and chairman of Roubini Global Economics LLC, said the current slowdown in the world economy has brought forward the timing of a new financial crisis.

“I thought a few months ago that the perfect storm would be 2013,” Roubini said in an interview in London today. “But now, the economic weakness in the U.S., euro zone and the U.K. is front loaded. So we’re going to double dip earlier. The climax of it could be 2013, or it could be already earlier. It depends on what policy tools are available.”

Wall St falls on euro zone debt fears

By Edward Krudy

NEW YORK | Tue Sep 6, 2011 2:07pm EDT

(Reuters) - Wall Street stocks tumbled for a third session on Tuesday on rising concerns about the euro zone's debt crisis and the outlook for the global economy.

Major U.S. banks were among the biggest decliners, with the KBW Bank index off nearly 2 percent on fears that lenders face a growing list of mortgage-related lawsuits.

Late on Friday, the Federal Housing Finance Agency sued 17 large U.S. banks over subprime mortgage-backed bonds.

The Worst-Case Euro Scenario

Each day the currency remains on life-support in its current form, the consequences of its eventual death become graver.

The Wall Street Journal

By SAJID JAVID

On the Continent, August is usually reserved for long vacations in the sun. Instead, European leaders spent the month working on increasingly desperate attempts to save the euro in its current form. There's only one prospect more frightening than what would happen if they fail: what would happen if they succeed.

Europe Signals Global Gloom

The Wall Street Journal

World Markets Fall as Continent's Debt Crisis Fuels Worries of Lengthy Slowdown

By BRIAN BLACKSTONE And LAURA STEVENS

FRANKFURT—International financial markets tumbled as a darkening global economic outlook and deepening fissures in Europe over its debt crisis fueled fears the world economy could slip into a period of prolonged malaise.

The Stoxx Europe 600 index fell 4.1% Monday, with banks hard hit. The euro slid below $1.42, its lowest in a month. The declines followed a slide in Asia, where stock indexes in China and Japan dropped by about 2% Monday. On Tuesday morning Asian markets again moved lower, with Japan shares falling 1.2% by late morning. During early Asian trading the 10-year U.S. Treasury yields hit as low as 1.911%, the lowest level in at least five decades, according to traders.

The end of Monnet

The Economist

The debt crisis is exposing problems in the basic design of the European Union

Sep 3rd 2011 | from the print edition

ALL it the curse of the euro. When politicians discuss the single currency’s crisis in Brussels, their actions are invariably seen by markets to be too little, too late. When they return home, they are accused of surrendering too much, too fast. So bond markets swoon and leaders become enfeebled. Such has been the fate of last July’s summit deal to save Greece for the second time and boost the embryonic European monetary fund. Government debt is dangerously wobbly in Italy and Spain, yet political approval of the deal has hit trouble in Germany and Finland.

Greek Central Banker Seeks Faster Effort From Athens

The Wall Street Journal

By ALKMAN GRANITSAS

ATHENS—Greece's top central banker called on the government to speed up efforts to close the budget gap amid growing concerns elsewhere in Europe that Athens can't pull itself out of its debt spiral.

Bank of Greece Governor George Provopoulos said that the lack of fiscal and other reforms were deepening Greece's recession.

A make-or-break month for the euro zone

Reuters

By Kathleen Brooks. The opinions expressed are her own.

For over a year now people have been calling for the collapse of the euro zone. Either one of the bailed out nations would leave, or the more fiscally sound northern European states would form their own version of a union. Regardless of what the outcome would be, the harsh reality was that the Eurozone’s massive floor -  allowing countries like Greece to borrow for nearly a decade at German-style interest rates without some limit on spending or enforcement of fiscal rules – meant that it could not survive.