The Great Debate UK
Once again German Chancellor Angela Merkel has had to dig deep to ensure that the euro zone can limp along for a little longer without any single nation defaulting.
And this story changes day by day. No sooner has Germany rescued the euro, Greece apologises and says they can’t meet the deficit targets – no more savings can possibly be achieved through austerity.
But as economists chart the course of this rollercoaster ride of expected default and the potential catastrophe of the entire European single currency project unwinding, is anyone paying attention to the social effect of all this uncertainty?
I don’t mean the pain of the middle classes ruing the days their house would increase in value week by week, I mean the potential for a completely different system of politics.
from The Great Debate:
- Steven Miller is managing director of Standard & Poor’s LCD, a unit not part of Standard & Poor’s ratings business. The opinions are his own and not those of S&P.-
As the worst credit crisis since the 1930s recedes, investors are starting to boil down the lessons of the past two and a half years.
The economic worst is past. But there are many issues left to worry about.
Start with the good news. GDP is now growing almost everywhere, while the unemployment rate is hardly rising anywhere. Businesses and consumers are less fearful. As much as half of the 20 percent decline in international trade has been erased.
Perhaps the best news is what has not happened. There have been no national defaults, countries dragged into political chaos, bitter divisions among the great powers or, with a few tiny exceptions, massive declines in consumption. The global political-economic-financial system is still in business.
Rating firms and analysts have been lowering high yield default forecasts in recent months, but there’s still plenty of pain in store for the banks, insurers (and taxpayers) who own collateralised loan obligations, funds that package leveraged debt.
Here are some cheery stats from Fitch Ratings, which is busy setting about downgrading more European CLOs.