Monthly Archives: October 2010

Eurozone Governments May Need To Bail Out Municipalities

A lot has already been written about the risk to municipal bond holders in the U.S., as a growing number of states face severe fiscal problems. But local government debt is an even bigger threat in Europe - where it could force governments to assume the debt, putting further pressure on sovereign bond spreads.
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Update: Call for A Eurozone Break-up

A rare column arguing that the peripheral countries of the monetary bloc should simply leave the eurozone by decree, has been published in the Institutional Investor. Vincent J. Truglia, Managing Director of Global Economic Research at Granite Springs Asset Management, writes that the flawed structure of the eurozone - which was built for political rather than economic reasons - leaves only two questions: 1) How do you handle the shrinking or dismantling of the Eurozone? and 2) What is the timing of such changes? As the tensions tearing the euro apart will only grow, it's likely that we'll see a lot more articles like this one in the future.
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Europe’s Sovereign Debt Crisis Hasn’t Gone Away

It’s surprising that the banking crises facing Ireland and Portugal, and the wider European banking sector - have not been more contagious. While the risk of Ireland and Portugal defaulting soars, other Europe sovereign bond yields remained fairly flat in the third quarter, and Greece even enjoyed a rally of 140bp to 775bp. This calm is not likely to last long though, before more questions are asked of the banks which own the dodgiest euro-zone debt.
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Is There Wind in the UK’s Sails?

The weak pound is the UK’s saving grace. Investment is recovering, and before long so will manufacturing. That's the game plan anyway. The biggest questions remain. What effect will budget cuts have on overall employment? And can the private sector make up the difference? So far, Sterling's weakness, and the UK's underrated capabilities as a trading nation, have helped cushion the economy. But as Mayor of London Boris Johnson has warned, there are stormy political and economic waters for the UK to navigate before the ship of state can be steadied on a new and prosperous course. And there are signs it's getting rougher out there. Still, it wouldn't be wise to bet against the UK's manufacturing and export sectors riding out the turbulence, and continuing the recovery they've started.
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Update: Renewable Energy Standard Slips Down Agenda

Hopes for an energy bill in the Senate are dimming, Politico reported today. Senate Democratic leaders are backing away from plans to tackle any type of energy legislation during the upcoming lame duck session, including a renewable electricity standard and a response to the BP oil spill.
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