The Great Debate UK
Eerie calm before Britain’s election
– James Saft is a Reuters columnist. The opinions expressed are his own –
To look at sterling and gilts, you would hardly know that Britain is sailing into a general election which will likely deliver a weaker government with a diminished ability, if not will, to grapple with high debts, an uncertain role in the global economy and an aging population.
It is impossible to say what will be the result on Thursday, nor what deals may be made between the surging Liberal Democrats, a bedraggled Labour party which will still have a significant wodge of votes and the Conservatives, who must be both hoping that their hour has arrived and that that hour does not prove to be Monday morning at 8 a.m., pouring with rain and all the trains are late.
There is a huge range of scenarios — a weak minority or majority government or a coalition of some form — but the common denominator across almost all likely outcomes is that all raise the risk of a weak government unable or unwilling to push through aggressive deficit-reduction measures.
Financial Crisis Part II
- Laurence Copeland is a professor of finance at Cardiff University Business School and a co-author of “Verdict on the Crash” published by the Institute of Economic Affairs. The opinions expressed are his own. -
Hollywood would never allow a record-breaking disaster movie to go without a sequel. The same seems to be true of the 2008 banking crisis.
German elections bring forward a possible stalemate situation for EMU
-Jane Foley is research director at Forex.com. The opinions expressed are her own.-
Next month’s UK general election is not the only one of significance in Europe. There is the possibility that the German regional elections in North Rhine-Westphalia on May 9 could result in the end of the CDU/FDP government’s majority in the upper house of parliament.
from Breakingviews:
Greek agony must galvanize the euro periphery
The emergency numbers are ringing. Greek 10-year debt yields are ballooning to well over 8 percent. The country cannot sustainably finance itself. The debt of other troubled euro zone countries -- Portugal, Spain, Ireland and Italy -- is vulnerable to contagion. Help for Greece from the International Monetary Fund and European Union can't come too soon. But the probable rescue must be a spur not a salve, in Greece and outside it.
Germany is reluctant but the EU's hand is being forced by the markets. The much-discussed help must surely come. The IMF will begin supervising Greek economic policy. But the task of making the country solvent looks immense.
from Global News Journal:
If Greece’s debt dam breaks, who gets wet?
The 16 countries that share the euro single currency have agreed they will help Greece out if it needs. So far so good. But only now is the nitty-gritty of how member states will go about paying for their contributions being hammered out. And suddenly things are getting a little complicated.
Italy announced on Tuesday it would have to issue government bonds -- known as BTPs -- to raise funds for its part in any Greek assistance.
from Breakingviews:
How to tell you’re not Greece — yet
By Rob Cox and Agnes T. Crane
Greece may be enviable as the ancient cradle of democracy -- but no country wants to emulate its contemporary fiscal troubles.
Markets are exacting a heavy price for the Hellenic Republic's budget woes. Yet the Mediterranean archipelago is hardly the only country that would fall into crisis if creditors lost faith. Indeed, the government of the United States is running a deficit of Greek proportions, although its total debt load is much less frightening.
from Breakingviews:
Greek default should not be taboo topic
Forget about Greece for a moment. Just think about country X, which has lived well beyond its means for years thanks to loans from inattentive or foolishly optimistic lenders. When the crunch comes, the X-people will have to cut back on spending. And the X-lenders will generally suffer from the famous rule of banking: "Can't pay, won't pay."
If Herman Van Rompuy, the president of the European Council, has his way, Greece is not going to be country X despite its weak government, bloated civil service and poor trade position. Van Rompuy said on March 25 that a vague new support agreement should "reassure all the holders of Greek bonds that the euro zone will never let Greece fail". This default taboo should be reconsidered.
Greece and the mythology of the EU
- Laurence Copeland is a professor of finance at Cardiff University Business School and a co-author of “Verdict on the Crash” published by the Institute of Economic Affairs. The opinions expressed are his own. -
The (probably temporary) resolution of the Greek crisis seems to have produced a result which was unexpected – by me, at least. For the first time in the history of the EU, the German taxpayer has refused to be sacrificed on the altar of European solidarity.
What’s next in EMU after Greece deal?
-Jane Foley is research director at Forex.com. The opinions expressed are her own.-
The European Union has finally agreed that an Economic and Monetary Union member country in serious fiscal difficulties will be able to receive bi-lateral assistance from its Eurozone partners as well as draw support from the International Monetary Fund.
from MacroScope:
Brit Euro Shock Horror: Part II
A week ago we ran a post on MacroScope noting, in part, that Britons have a strange relationship with the euro, sometimes bordering on disbelief that it exists at all. Some new numbers from the monthly Bank of America Merrill Lynch fund managers poll underline the extent of UK scepticism compared with that of others.
For two months, BofA Merrill has asked fund managers around the world what they think will eventually happen as a result of the Greek debt crisis. Four choices are on offer:
