Tag Archives: failed bond sale

Bad To The Bone – EU Debt Crisis Reaches The Core

24 Nov

barnabyisright.com 3 weeks ago, on November 3rd ( “Gillard Offers Borrowed Money To Bail Out Europe” ):

Let us be perfectly clear, dear reader.

Europe is stuffed. Totally and utterly stuffed.

As is the USA. The UK. Indeed, as is the entire Western world’s financial system.

You simply can not fix a debt problem, by borrowing more money.

Reuters today:

“Disastrous” bond sale shakes confidence in Germany

A “disastrous” German bond sale on Wednesday sparked fears that Europe’s debt crisis was starting to threaten even Berlin, with the leaders of the euro zone’s two biggest economies still at odds over a longer-term structural solution.

With contagion spreading, a majority of 20 prominent economists polled by Reuters predicted that the euro zone was unlikely to survive the crisis in its current form, with some envisaging a “core” group that would exclude Greece.

Investors were also unnerved by reports that Belgium is leaning on France to pay more into emergency support for failed lender Dexia under a 90-billion-euro ($120-billion) rescue deal that had appeared done and dusted.

A special report by Fitch Ratings suggested France had limited room left to absorb shocks to its finances, such as a new downturn in growth or support for banks, without endangering its triple-A credit status.

“The debt crisis is burrowing ever deeper, like a worm, and is now reaching Germany,” one of the more eurosceptic backbenchers in Angela Merkel’s center-right government, Frank Schaeffler of the junior coalition partner Free Democrats (FDP), told Reuters.

Merkel, French President Nicolas Sarkozy and new Italian Prime Minister Mario Monti were to meet in the French city of Strasbourg on Thursday.

They were expected to discuss the reforms planned by former EU commissioner Monti at a meeting they hope will allow Italy to put behind it the era of scandal-plagued former Italian prime minister Silvio Berlusconi, who resigned this month.

Underlining how deep the euro zone crisis has become, the German debt agency could not find buyers for almost half a bond sale of 6 billion euros. That pushed the cost of borrowing over 10 years for the bloc’s paymaster above those for the United States for the first time since October.

“It is a complete and utter disaster,” said Marc Ostwald, strategist at Monument Securities in London.

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