Wednesday, November 16, 2011

End of the euro, Wednesday edition

Euro-fear is spreading, with both bond-trading Masters of the Universe and financial journalists affected.

Gerald Braunberger in this article, Steigende Renditen: Die Staatsschuldenkrise erreicht Kerneuropa Frankfurter Allgemeine Zeitung 15.11.2011, names the following countries as facing sovereign debt pressure in the markets: Austria, Belgium, Finland, France, the Netherlands, Slovenia.

That's in addition to the five countries that are operating under the thumb of the Frankfurt Group's destructive austerity policies as a result of the pressure on their sovereign debt: Italy, Ireland, Greece, Portugal and Spain.

With those two lists, the only countries in the European Union not having significant sovereign debts problems would be Cyprus, Estonia, Germany, Luxembourg, Malta and Slovakia.

Miguel Jiménez and Miguel Mora make an analysis from a somewhat different viewpoint in La crisis de la deuda soberana golpea ya a 12 de los 17 países del euro El País 16.11.2011. They combine the record-high premiums the various countries are paying on their bonds since the formation of the euro and compare that premium to the premium Spain was paying in May 2010, when Spain began to be seen as a debt-crisis country. According to their count, only five euro countries are in better shape than that: Estonia, Finland, Germany, Luxembourg and the Netherlands.

In comparison to Braunberger's list, only Estonia, Luxembourg and Germany are the only currently "safe" countries in the eurozone.

No wonder Paul Krugman thinks we're looking at Eurogeddon 11/15/2011.

Victor Mallet summarizes Spain's current situation in 'The new government will have to act quickly' Financial Times 11/16/2011:

Spain, together with Italy, is therefore perilously close to needing a bail-out that neither the European Union nor the International Monetary Fund could afford and that could end in a financially catastrophic break-up of the euro. Spain is also saddled with 5m unemployed, equivalent to more than 21 per cent of the workforce, and recorded zero economic growth in the three months to September. The election campaign has been focused on domestic issues, but Mr Rajoy, if elected, will have to convince the bond markets and Spain's European partners - and his fellow citizens - that he can engineer a recovery.
Heckuva job, Frankfurt Group!

Catherine Rampell sketches out possible repercussions for the US economy of a eurozone collapse in The Euro Zone Crisis and the U.S.: A Primer Economix 11/14/2011.

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