Update: The Panic of 2011 (2)

  • Irish Left Review, Michael Burke / Socialist Economic Bulletin – Panic on world markets:

    European (including British) stations are reporting the Wall Street-led declines as a response to the continued debt crisis in Europe. But this makes no sense. An EU crisis would have been felt first in EU markets and perhaps not at all in the US… The Asian networks come closest to identifying the source of the current crisis- which isn’t in Europe at all. Their consensus is that markets are plunging because of the slowdown in the US economy… For too long this economy has been a weigh-station for US companies counting their profits. Instead of listening to their self-serving advice on economic policy (while following German strictures on fiscal policy) policymakers in Ireland should emulate what works, in Germany, Sweden and most of Asia, investment-led growth initiated and guided by the State.

  • Naked Capitalism / Yves Smith – Market Rout Continues: …perhaps the biggest change in attitude is lost faith that central bankers can or will intervene successfully. Bond purchases by the ECB did little to calm markets (a recovery in Italian and Spanish bonds quickly reversed). The Fed seems bizarrely preoccupied with inflation although the real problem is that what the US needs is fiscal stimulus to offset consumer deleveraging and failure of businesses to invest. We actually need more bankruptcies and asset writedowns in combination with more aggressive spending. In Euroland, the scope of the sovereign debt crisis has now reached the too big to fail Italy, and one of my German press reading contacts said that finance minister Wolfgang Schauble nixed yesterday the notion of enlarging rescue facilities.
  • SpiegelGerman Stocks Fall Sharply; Panic Hits Global Markets: 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.
  • CNBCMarket Crash; Faber – Brace for a Global ‘Reboot’ and a War: “The trouble is that governments can default in two ways. Either they just stop paying the interest and there is a debt restructuring, like Argentina went through; or they just pay the interest and the principle eventually, in a worthless currency. That’s the way the U.S. will likely do it.”
  • Business InsiderROUBINI: US And UK Near Recession, PIIGS There Already, BRICS Face Slowdown;
  • The GuardianHow the eurozone debt crisis will affect us all: There is one obvious remedy – eurobonds. Under this idea, members of the eurozone would issue bonds that would be underwritten by all states – in other words, all would accept ultimate responsibility for each other’s debts. However, this arrangementwould imply the creation of a new pan-eurozone treasury ministry with powers to dictate members’ budgets. That’s virtually the creation of a new super-state, say some. Electorates might not vote for it;
  • BloombergEurope’s Plan Won’t Cut Greek Debt; Allen, Eichengreen and Evans: There’s a simpler explanation: The debt-reduction deal failed because it didn’t reduce the debt… Obviously, this is a raw deal for Greece. It also is a bad deal for the euro area, whose leaders again failed to contain the crisis. And it is a bad deal for the European taxpayer, who will shoulder all the sacrifices, while the banks make none…This deal should be thrown out. In its place, the EU should create a real debt exchange with real haircuts for the banks and a significant reduction in Greece’s debt stock.The good news is that there will be an opportunity to change course. Greece’s debt is still unsustainable, and it will have to be restructured again.
  • The Guardian, EditorialFinancial markets and governments; No one’s driving: What we have here are two separate problems – but they are linked by a common factor. In Europe the big crisis is over governments which are either flat broke – Greece, Portugal and possibly Ireland – or are at least having cashflow problems: Spain and Italy, who are now both being charged over 6% for loans to the government. In the US the long-running worry is over the health of the economy. And the issue that links these two continents’ troubles is a lack of political leadership…;
  • MSNBCWorld stock prices plunge amid ‘general fear’ of a new US recession, European debts;
  • The Wall Street JournalEurope’s Central Bank in Crisis Mode; Debt Worries Trigger New Bond Purchases Despite German Opposition, as Trichet and Top EU Official Urge National Governments to Take Bigger Role: In a nod to funding problems at euro-zone banks, which have increased their use of ECB lending and deposit facilities, the ECB said it would continue to offer unlimited loans to banks in maturities up to three months until at least year-end, ensuring banks will have adequate access to funding despite recent strains in financial markets. [This money will undoubtedly be used by Irish Banks to profit from the Irish State crisis – and to stave off the  billions they are losing in deposits]
  • CNN MoneyEuropean fear; The wolves are at the gate: “Italy has been hit,” Lombardi said. “It’s the third largest economy in the euro area, and there is no organization that can bail Italy out. It’s just too big to swallow.”
  • ZeroHedgeExplaining How The Just Announced ECB Market Rescue Pledged 133% Of German GDP To Cover All Of Europe’s Bad Debt: And expanded it will have to be: not by two, not by three, but by a cool four times, to a unbelievable €3.5 trillion which … will be necessary to convince financial markets of euro area resolve to save Italy and Spain;
  • ForbesBrazil Stocks Index Plummet: The Worst Performance Among The World’s 20 Largest Equity Markets;
  • Business InsiderThere Are So Many Homeless In Virginia Beach Officials Are Pondering Official Tent City;
  • ReutersGreek and Irish blows knock RBS to $1.1 billion loss;
This entry was posted in Bank Run, Bankers' Bailout, Breaking News, Budget, Debt Default/Restructuring, ECB/IMF, Economy, EFSF / European Financial Stability Fund, ESM / European Stability Mechanism, EU, Euro / Sovereign Money, Geopolitics, Greece, ireland, Italy, Spain, War & Peace and tagged , , , , , , , , , , . Bookmark the permalink.

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