Posts Tagged ‘Greece’
After Optimism of A Plan To Save Europe, Crisis Again.
Just one week after European leaders agreed to bolster lenders’ capital and boost the region’s rescue fund in a bid to stem the debt crisis, Greece Prime Minister, at pressure holding on to political power, sends the world uneasy again with a decision.
Last week, European leaders agreed to boost the firepower of the region’s rescue fund to 1 trillion euros ($1.4 trillion) and persuaded bondholders to accept a 50 percent loss on their holdings of Greek government debt. Banks will, as part of the plan, need to raise capital to insulate themselves against losses on government debt. Still to be decided are the details of the haircut, what assets banks can count as capital, how banks will raise it, and whether future bank debt is backed by a national or European guarantee. The European Financial Stability Facility which includes the possibility of China, Brazil and Russia involvement. Having the an agreement on the plan assured global financial markets that the details will be worked out and Europe will avoid a messy default. The European Financial Stability Facility which includes the possibility of China, Brazil and Russia involvement.
Europe Banks and Financial Services Index rose 8.8 percent higher in London the following day. Societe Generale jumped 23 percent and Credit Agricole 22 percent. Barclays climbed 18 percent, BNP Paribas (BNP) SA 17 percent and Deutsche Bank AG (DBK), Germany’s largest lender, 16 percent.
A Greece default?
You will have heard me mention the Greek sovereign debt problem before. In February, this issue has been weighing down the markets somewhat pending a response from European Central Bank. Last Thursday, a serious contagion forced ECB to response seriously with a huge EUR750 billion safety net to arrest the fiscal crisis and stop the turmoil from spreading to the other 15 nations that use the euro.
Bank of America – Europe Bailout
Markets have been really volatile last 2 weeks due to this issue, other issues like China’s property prices and inflation do not help in calming the market. Main story goes, after the drop last week, traders and investors gave positive response and the markets for fixed income, equity and Euro rebounded on Monday, a day after hard fought European lifeline.
The Whole Issue with Greece (Advance)
Greece and her budget problems has been in the news for some time now. The issued started way back in 1999.
Greece, which had an increasing budget deficit (where spending is higher than income) that cause it to fail the criteria for joining the single European currency in 1999, joined the euro in 2001. Member nations must keep deficits at less than 3 percent of GDP and trim national debt to less than 60 percent of GDP under the pact.
