Kathleen's Feed
Jun 23, 2011
via The Great Debate UK

Could Italy go the way of Greece?

Italy has hogged the headlines in recent weeks mostly for political reasons rather than financial ones. But in a few months we may be concentrating on its fiscal woes and unsustainable debt burden.

Last week credit rating agency Moody’s announced it was putting Italy on review for a possible downgrade to its Aa2 credit rating. These reviews typically last three months or so, and although a downgrade would still leave Italy at the higher end of investment grade, it is not good news to be sliding down the scale, especially when a sovereign debt crisis is raging further along the Mediterranean coast.

Jun 17, 2011
via The Great Debate UK

Why China’s support for Europe comes with a caveat…

Investors are breathing a sigh of relief that it looks like Germany, France and the ECB are singing from the same hymn sheet about a long-term solution to the Greek debt crisis. But while most people think that the key to Athens’ fate is held by Europe’s powerbrokers in the core, there is another fulcrum of support that is vital for the survival of the euro.

That is China. The Asian powerhouse has been steadfast in its support for the Eurozone since the onset of the crisis. It purchased a significant amount of EUR440bn EFSF rescue facility that started auctioning bonds earlier this year. Although it is difficult to clarify how large its European debt holdings actually are since this data isn’t published by China’s Sovereign Wealth Fund, it is thought to include Greek, Portuguese and Spanish bonds.

Jun 3, 2011
via The Great Debate UK

Trichet’s United States of Europe?

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By Kathleen Brooks. The opinions expressed are her own.

Another week another round of EU officials proposing solutions to the Greek insolvency problem.

First there was the President of the European Council Jean Claude Juncker who suggested that bond holders could be tempted into rolling over their maturing debt and buying more Greek bonds as long as a few sweeteners like higher coupon or interest rates were thrown in.

Jun 1, 2011
via The Great Debate UK

Is Ireland the same as Greece?

By Kathleen Brooks. The opinions expressed are her own.

When Nouriel Roubini makes a prediction people stand up and listen. He was right about the financial crisis, now he has predicted a sovereign debt crisis (aka default) for Ireland in the next two to three years.

This prediction comes at a delicate time for Europe’s periphery. Greece is staring into the abyss of default, fiscal despair and a possible exit from the euro zone if it doesn’t receive its fifth tranche of funds from the IMF next month.

May 20, 2011
via The Great Debate UK

Are investors nuts for LinkedIn?

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By Kathleen Brooks

Who would have thought that LinkedIn — the business social networking site launched in 2003 — would at one point be worth more than $90 a share on its first day of trading, within minutes doubling its $45 opening price?

Not the banks who managed the IPO or analysts who priced the stock prior to the listing. Neither did the naysayers who thought $45 (the equivalent to 17 times 2010 earnings of just over $243m) was way too high a price to list at in the first place.

May 12, 2011
via The Great Debate UK

Mario Draghi: A breath of the fresh air at the ECB

It looks all but certain that the next head of the European Central Bank (ECB) will be Bank of Italy Governor Mario Draghi. He has received the crucial backing from Germany’s Chancellor Angela Merkel and is likely to be voted in, bar a major shock, when the EU leaders meet next month.

With a PhD from the Massachusetts Institute of Technology, Draghi  has a resume as long as your arm:  a one-time economics professor at Harvard University, a former Vice President at Goldman Sachs, the head of the Italian Treasury that oversaw Italy’s transition to the euro as well as being Italy’s central bank chief since 2006.

May 3, 2011
via The Great Debate UK

A very uneven recovery

By Kathleen Brooks

The readings for first quarter growth from the U.S. and the UK are out and it was a fairly sluggish start to the year on both sides of the Atlantic.

A lacklustre 0.5 percent quarterly growth rate in the UK is unlikely to stoke too much enthusiasm for the UK, especially with public sector cuts setting in this quarter.

Apr 19, 2011
via The Great Debate UK

The U.S.’s big, fat political debt problem

By Kathleen Brooks

The U.S. has practically zero chance of solving its debt problem in the foreseeable future while politicians line up to contest the 2012 Presidential elections.

We have already heard President Obama lay out his partisan cards. He called for Congress to come up with a plan to trim $4 trillion from the U.S. deficit in the next 12 years. His favoured way to do this: end tax cuts for the rich – a well versed refrain from Democrats throughout the ages.

Apr 8, 2011
via The Great Debate UK

Bernanke steps up to scrutiny

-Kathleen Brooks is research director at forex.com. The opinions expressed are her own.-

While ECB head Jean Claude Trichet is nearing his final post-policy decision press conferences – he retires in October – on the 27 April the Fed’s Ben Bernanke will be stepping up to the podium for his first.

Apr 1, 2011
via The Great Debate UK

Would the euro solve Switzerland’s problems?

By Kathleen Brooks. The opinions expressed are her own.

While some market commentators are questioning if the euro zone should even exist, authorities in Switzerland might be looking with envy at the 27-member currency bloc.

But why would a nation as renowned for political as well as financial stability like Switzerland desire the euro? The chief benefit is for its export sector.  Swiss companies including watch marker Hublot have complained recently about the strong Swiss franc weighing on their competitiveness. And watch markets are not alone. Exporters in sectors as diverse as cheese and chocolate to engineers, pharma companies and chemical firms are all suffering from the same problem: a strong franc.