Financial Regulatory Forum

By Emily Kaiser

WASHINGTON, May 21 (Reuters) – It took $5 trillion and an unprecedented global coalition of G20 countries to stabilize the economy after investment bank Lehman Brothers collapsed in 2008. Quelling the next phase of the financial crisis may be even harder.

To stop the panic that erupted nearly two years ago, governments transferred a mountain of debt from private to public accounts. Now, those government debts are distressing financial markets and there is nowhere left to shift the burden.

Europe’s clumsy response to Greece’s debt woes highlighted the economic and political headaches that await debt-laden countries and those who finance their borrowing.

European leaders have yet to convince investors that they have a credible short-term plan to contain government deficits and a long-term answer to the region’s slow growth. Until they do, financial markets will remain volatile, and the hard-fought economic recovery is in jeopardy.

“Europe is trying to solve a debt problem with further debt,” said Domenico Lombardi, president of the Oxford Institute for Economic Policy.

By Jan Strupczewski

BRUSSELS, Jan 12 (Reuters) – The European Commission is likely to launch infringement proceedings against Greece for failing to provide reliable statistics on its budget deficit and debt, an EU source with knowledge of the proceedings said on Tuesday.

The Commission, the European Union’s executive arm, is responsible for upholding EU law. It had already once launched proceedings against Greece for unreliable deficit statistics in 2004, but closed them in 2007.

“There will probably be another infringement procedure… because providing timely and reliable statistics is an obligation under EU law and they have failed in their obligation,” the EU source said.

   By Madeline Chambers
BERLIN, Oct 26 (Reuters) – German Chancellor Angela Merkel defended on Monday her plans to pursue billions of euros in tax relief in the face of rising debt, saying the tough savings course favoured by her critics would damage a fragile recovery.

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By Glenn Somerville and David Lawder
WASHINGTON, Oct 20 (Reuters) – The Obama administration will shutter programs at the heart of a $700 billion financial bailout but remains focused on supporting a fledgling economic recovery, Treasury Secretary Timothy Geithner said on Tuesday.

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By Jason Lange
MEXICO CITY, July 23 (Reuters) – Mexico will have to cut
spending and raid its rainy day savings to cover a 480 billion
peso ($36.6 billion) hole blown in government revenues by the
recession, Finance Minister Agustin Carstens said on Thursday. (more…)

   By Emily Kaiser
   WASHINGTON, July 17 (Reuters) – The Obama administration’s $787 billion stimulus package is working despite rising U.S. unemployment and stabilizing the economy must take precedence over tackling the bloated deficit, a top White House economic adviser said on Friday.

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