Investors Brace as Europe Crisis Flares Up Again

From The New York Times:

By and
Published: September 11, 2011

Fears about Europe’s deteriorating finances intensified on Sunday as new doubts about the health of French banks, as well as Germany’s willingness to help Greece avert default, left investors bracing for another global stock market downturn this week.

In Greece, the epicenter of the Continent’s financial disarray, government officials announced new austerity measures on Sunday, even as the country’s finance minister, Evangelos Venizelos, warned that the Greek economy was expected to shrink much more sharply this year than previously anticipated. In a revision, a contraction of 5.3 percent in 2011 was predicted, rather than the 3.8 percent forecast in May.

Slower growth could make it harder for Greece to pay its debts, even as it tries to reduce them by cutting government spending and raising taxes.

While the Greek drama has been running for more than a year, only recently has it threatened French and German banks, unnerving investors around the world and sending stocks tumbling in Europe and the United States.

More than anything else, political and business leaders want to avoid the phenomenon of contagion, in which fears in one country spread to others, causing severe stress throughout the financial system, as happened in the fall of 2008. To be sure, Europe could still draw away from the precipice. That is especially true if policy makers come up with a plan to keep Greece afloat while also preventing anxiety from infecting other countries like Spain and Italy, whose huge debts and weak economies have fed worries that their borrowing has become unsustainable.

On Sunday, French government officials braced for possible ratings downgrades by Moody’s Investors Service of France’s three largest banks, BNP Paribas, Société Générale and Crédit Agricole, whose shares were among the biggest losers last week. The biggest banks in Europe, especially in France, hold billions of euros’ worth of Greek bonds, and investors fear even a partial default by Greece would sharply diminish the value of those assets, eroding already weak capital positions.

American financial institutions, typically heavy lenders to their French counterparts, have begun to pull back on these loans, but United States banks’ exposure to France remains substantial.

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5 Responses to “Investors Brace as Europe Crisis Flares Up Again”

  1. Andrea B. Says:

    Yup, fear hyped by the media driven by tips from investors to create fear in the markets, so as to drive up interest rates which in turn get bigger returns from debt loans for Wall Street banks.

    I had assumed that people would have realised that the hyping of fear in the markets, is the exact same thing as the hyping of fear in the so called war on terror, by this point.

    In all honesty I support throwing Greece out of not only the Euro, but the European Union, as it has made no real effort to get its problems under control. Interestingly the three ruling families have moved all there unfixed assets out of Greece. It is becoming clear they are engineering getting thrown out of the Euro. By moving there assets outside the country, they will have spending power of an order of magnitude beyond what they have now in Greece after it would be kicked out of the Euro, where’as the ordinary Greeks will be reduced to debt slaves, with debt levels several times what they are now as there dedt is denominated in Euro’s.

    The destruction of wealth in the general population and ever increasing concentration of wealth into an ever decreasing minority, has happened before. That was Rome under Pope Leo in 450 AD. Neo-Liberalism in action, or Neo-Feudalism, as it should more accurately be known.

    Spain, Ireland and Portugal are going to get there economies in order over the next couple of years, because they are making the effort to do so.

    Greece constantly lies, fabricates and engages in fraudulent behaviour. The sooner it is kicked out of the Euro and hopefully the European Union, the better.

  2. tinagrrl Says:

    Gee, that “neo-lib” (as you called him), Dr. Paul Krugman, suggested it would be better for Greece to leave the EU more than a year ago, since then they could devalue THEIR currency, and (perhaps) become “healthy” again. Hmmm, I guess it’s good when the inevitable (according to many) becomes popular.

  3. Andrea B. Says:

    Dr. Paul Krugman also suggested cutting welfare and state pension payments in all Euro bailout countries. His pension ideas would affect my parents. Do you support cutting pensions and welfare payments?

    As for his excusing of oil companies and there bahaviour, we saw enough of that in Ireland.

    He maybe left in the USA, but he is right in Europe. He very rarely criticised the Democrats in the USA, who are farther to the right, than any government party in Europe.

    Krugman suggested that Greece leave the Euro last year, not the EU. He also had the same suggestion for a host of other countries who will be back in shape in the next two years. What he left out when suggesting that is who he is pals with in Greece and that Wall Street would have a field day with any country that leaves the Euro and destroy them completely and utterly.

    As for Greece, starting to pay there tax would be a good first step for them to take.

  4. tinagrrl Says:

    Errr — Andrea, please show me where he supports those positions. I’ve been reading him for some time now, and those statements you made do not seem to be consistent with what he writes.

    Also, remember, his position on Greece is quite different from that on Spain, etc.

    Also, if Ireland had not decided to bail out the banks — and put creditors before citizens their current position might be better.

    Did you know there is a fairly active market in Drachma futures, if and when it’s issued?

  5. tinagrrl Says:

    Andrea writes: “He maybe left in the USA, but he is right in Europe. He very rarely criticised the Democrats in the USA, who are farther to the right, than any government party in Europe.”

    Wow, from the very beginning he said Obama’s stimulus was not big enough. He has consistently criticised both Democrats and Republicans. I don’t know who you are reading, but it’s not Krugman, that’s for sure.

    Perhaps you should look at your sources.

    As far as being right in Europe — compared to who?

    Just wondering.

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