RSS feedDebt
’Moody’s looks to Finland – to explain Ireland, Spain
Want to know the shape of things to come in Ireland? Spain?
Look no further than … Finland.
That particular Nordic nation experienced an almighty financial boom in the 1980s. In 1990 came the the bust — led by a slowdown in the global economy,
ICO, Spain’s public sector risk taker
Via Spanish business daily Expansion, and run through Google Translate, comes this tidbit on Spain’s exploding supranational credit agency the Instituto Credito Oficiale:
The Bank of Spain notes that the “growing lending activities of the Instituto de Credito Oficial (ICO)”
Poland ‘swaps’ out its 2009 budget deficit
Oh dear. It appears some European governments never learn.
News comes to us via Dow Jones on Friday of Poland’s extremely active participation in the interest-rate and FX derivative market as recently as 2009.
Geriatric asset prices
BIS analyst Előd Takáts is worried about ageing. And not in a personal way, either.
In a caveat-heavy but very interesting Bank for International Settlements working paper, the economist seeks to investigate how ageing populations will impact asset prices — specifically,
The Congressional Budget Office does a US fiscal crisis
If you thought the Bank of England’s fan charts were bad in terms of err, fanning uncertainty, take a look at the below from the US Congressional Budget Office’s economic and budget issues brief:
According to the CBO’s forecast,
Magnus: ‘An existential crisis for the euro-system’
UBS senior economic adviser George Magnus has laid his cards on the sovereign crisis table.
He, for one, does not think the European Union’s weekend rescue will be enough to resolve the situation or stop it from spiralling into a structural crisis for all large debtor nations in the industrialised world.
First thoughts on Greek aid activation
Greece moved to activate an EU-IMF aid package on Friday — and initial comments from analysts flew into the FT Alphaville inbox.
In the first instance, though, it’s worth pointing out that the news came as a bit of a surprise to the EU Commission,
Greek austerity with the truth
The Greek finance minister is supposed to have set his government a Herculean task of fiscal adjustment — to get his country out of its debt crisis, and away from the risk of default.
So what’s the following comment all about,
‘No chance of Greece going bankrupt’
With markets being spooked left, right and centre due to Greece’s ongoing debt travails, it’s good to see the Greek government providing some reassuring commentary to soothe concerns.
As Reuters quoted a Greek government spokesman saying on Thursday (emphasis ours):
Spanish debt data point du jour
Delinquency rates for Spanish small to medium enterprises have begun to stabilise, Fitch reported on Wednesday.
While this is fairly good news, the data seem to underline how far Spain still has to go in solving its private debt problem,
US debt saturation *alert*
There was an interesting chart put up the other week on Nathan’s Economic Edge blog (H/T Chris Cook).
We’re not sure how accurate its assertion is. However, if what it implies is true, the consequences are worrying.
Daitiye nam rizyku!
Here’s a telling factoid from BNP Paribas’ Emerging Markets team on the state of global risk appetite.
A Ukrainian local debt auction on Tuesday attracted what the analysts described as “spectacular and unprecedented demand from international investors”.
More good news on corporate default rates
We wondered whether corporate defaults had peaked towards the end of last year after Moody’s reported the first decrease in the speculative-grade default rate since January 2008, down from 12.9 per cent in November to 12.5 per cent in December.
Morgan Stanley mulls ‘debtflation’
That, by the way, is the idea that countries can inflate their way out of indebtedness.
Morgan’s Global Economics Team, headed up by Joachim Fels, Manoj Pradhan and Sypros Andreopoulos, has made the case for “soft default”
Go Greece tightening…
Barclays Capital has run a useful exercise on Greece to try and understand the magnitude of the problem facing Europe.
Rather than looking at the country’s outlook based on the fiscal adjustments currently being implemented,
Spanish government cuts net debt issuance
Flashes out of Reuters on Monday suggest the Spanish Treasury has decided to cut the amount of money it will raise from the bond markets this year by 34 per cent:
RTRS-SPANISH TREASURY SAYS TO RAISE NET 76.8 BLN EUROS FROM MARKETS IN 2010,
A steeper path to follow
Sovereign debt yield curves are steepening.
On Thursday, US 30-year yields hit four-month highs after a government long-dated auction received poor demand and revived worries over the federal budget deficit.
The US government’s toxic borrowing strategy
We were struck by the following quote in Monday’s NY Times story about the wave of debt repayments facing the US government:
“The government is on teaser rates,” said Robert Bixby, executive director of the Concord Coalition,
Banks don’t just have an asset problem, says Moody’s
Here’s the Moody’s report that is making waves in financial media circles on Tuesday morning.
The basic premise: The average maturities of new debt issuance by Moody’s-rated banks around the world fell from 7.2 years to 4.7 years over the last five years — the shortest average maturity on record.
Debt and the dollar’s demise, a compendium of concerns
Here’s a stark reminder of the ticking time bomb that is the US’s federal debt — now at an $11,900bn, or $38,000 per citizen.
Ratings agency Standard & Poor’s is now warning that the US will have to officially — and imminently — raise its federal debt limit:
The shape of things to come is probably not ‘V’
So say Bank of America Merrill Lynch economists — and it’s all because of those debt-ridden US consumers.
For years US consumers have binged on cheap credit and provided the demand needed to match China’s furious supply.
Islamic finance to the rescue?
From Wikipedia:
Usury (pronounced /ˈjuːʒəri/, comes from the Medieval Latin usuria, “interest” or “excessive interest”, from the Latin usura “interest”) originally meant the charging of interest on loans.
The roguest debt agency of them all
Here’s an interesting story out of Austria on Wednesday.
Via Reuters:
VIENNA, July 15 (Reuters) – Austria’s government debt agency is facing up to 380 million euros ($534 million) in losses from as much as 10.8 billion euros it invested in subprime debt-based structured investments,
Bible code, finance edition
A financial lesson brought to us from way, way, back many centuries ago courtesy of HSBC’s chief economist Stephen King:
In the Bible, you can find everything you need to know about government borrowing.
US net foreign debt headed towards 100% of GDP
Moving back into the realm of scary figures, a new report by Peterson Institute director Fred Bergsten predicts US net foreign debt could be headed towards $50,000bn or beyond and as much as 100 per cent of GDP as soon as 2030.