In The Know

August 16 2011

TELEGRAPH-Germany’s Angela Merkel faces eurobond mutiny : The simmering revolt in the Bundestag makes it almost impossible for Mrs Merkel to offer real concessions at Tuesday’s emergency summit with French president Nicolas Sarkozy. “We are categorical that the FDP-group will not vote for eurobonds. Everybody must understand that there is no working majority for this,” said Frank Schäffler, the finance spokesman for the Free Democrats (FDP). http://www.telegraph.co.uk/finance/financialcrisis/8703147/Germanys-Angela-Merkel-faces-eurobond-mutiny.html

DER SPIEGEL-Concerns Mount in Germany Over ECB Bond Buys : German Finance Minister Wolfgang Schäuble opposes this second option and believes that economic assistance should only be given out under strict conditions. “We’re not going to bail out countries at any price,” Schäuble told SPIEGEL in an interview published this week. Although he left open the question of potential consequences, there’s no denying they would be significant: Greece would go bankrupt and possibly abandon the monetary union. The whole euro zone could break up. …”The ECB cannot become an institution that can compensate for the failures of the budgets of individuals states, such as Italy, over the long term,” says Volker Bouffier, governor of the western state of Hesse, where the ECB is based. “That doesn’t correspond with its mandate, and that takes the pressure off the affected countries to put their budgets in order by themselves.” http://www.spiegel.de/international/spiegel/0,1518,780258,00.html 

DER SPIEGEL—‘There Is No Unlimited Support’ :  In a SPIEGEL interview, German Finance Minister Wolfgang Schäuble talked about his opposition to euro bonds, the limits to European solidarity and the need for governments to reduce their debt burdens.http://www.spiegel.de/international/europe/0,1518,780248,00.html  

 FT-Turmoil darkens the mood for corporate debt : Even after a modest improvement of sentiment on Monday, the Markit iTraxx index that follows the credit default swaps of European investment grade debt remains at about 145 basis points, and the Crossover index, which tracks riskier high-yield bonds, has held comfortably above 600bp. Both gauges are at their highest since the financial crisis of 2008-09. http://www.ft.com/intl/cms/s/0/d0b5d522-c755-11e0-9cac-00144feabdc0.html#axzz1V8JnQsSh 

 MARKETWATCH–Next budget showdown is just 6 weeks away : The conventional wisdom in Washington (especially inside the administration) holds that the next skirmish will come around Thanksgiving, when the so-called Super Congress of six Republicans and six Democrats have a deadline to make their recommendations about reducing the expected 10-year deficit by another $1.5 trillion. But the next budget confrontation in Washington could come much sooner. We could be just six weeks away from another threat to shut down the federal government. That’s Oct. 1, when the new fiscal year begins. http://www.marketwatch.com/Story/story/print?guid=831EED18-C4FC-11E0-9192-00212803FAD6

 FOREX LIVE-Fed’s Lacker: Zero Rates Thru Mid-2013 ‘Highly Contingent’ : Richmond Federal Reserve Bank President Jeffrey Lacker said Monday that the Federal Open Market Committee’s decision last Tuesday to extend its expectation of keeping the federal funds rate “exceptionally low” through mid-2013 was not warranted, but he emphasized the Fed’s policymaking body did not lock itself into keeping the funds rate near zero. The FOMC’s new “forward guidance” is “highly contingent” and subject to change as economic and/or inflation circumstances evolve, Lacker said in an interview with Market News International.http://www.forexlive.com/blog/2011/08/15/feds-lacker-zero-rates-thru-mid-2013-highly-contingent/ 

NY TIMES – Setbacks May Push Europe Into a New Downturn : Another recession is already well under way in Greece and Portugal, while growth in countries like Spain, Italy and Britain has been very slow since last year. But now Germany, which has been remarkably strong, hauling the rest of the Continent along with it, seems to be decelerating. The Ifo Business Climate Index, considered a reliable predictor of German growth, fell in July as executives became less optimistic about exports.”It is more than a soft patch,” said Eric Chaney, chief economist at a French insurer, the AXA Group. “The business cycle is really coming to a quasi-standstill in Europe.” http://www.nytimes.com/2011/08/15/business/global/threats-on-many-fronts-for-european-economy.html?ref=global

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This entry was posted in Bonds, Daily Telegraph, Debt, ECB, Euro Zone, European Central Bank, Fed, Federal Reserve Bank of New York, Financial Times, Germany, Greece, Merkel, Portugal, Republicans, Sarkozy, US. Bookmark the permalink.

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