Debt

Until now, the debt crisis seemed to spare the biggest European economy. But the country everybody is relying on starts to meet difficulties to refund its debt. The sale of German benchmark bonds on Wednesday turned to a disaster and the Bundesbank has been forced to hold on to record amounts (39% of the €6 billion Germany had hoped to sell) to ensure the auction did not fail. However, this is not so surprising if one takes a look on German 10-year real bond yield that turns to be negative:

Germany has raised over a quarter of its total EFSF obligation of €211 billion by way of what is essentially magic. The Telegraph reports that “Germany is €55bn richer than…

For the French government, it is more than ever urgent to convince everyone that the State deficit is moving in the right direction and the public debt is sustainable. In the context of an uncertain future for the French credit rating triple A note, the present debate on the budget of the State for the coming year and the austerity measures it includes became a really hot issue. The initial project of budget for 2012 has been already adopted by the Financial Commission at the French National Assembly and is now being discussed by the deputies.

The eurozone’s third-largest economy is being sucked deeper into the sovereign debt crisis, since one of the major credit rating agencies downgraded yesterday its credit rating. S&P downgraded Italy to “A/A-1” from a “A+/A-1+” grade because of “Italy’s weakening economic growth prospects”, with a negative outlook, meaning further downgrades are possible. The move – S&P’s first downgrade of Italy since 2006 – places S&P’s rating on Italy three notches below that of Moody’s, the rating agency that many had expected to cut first.

This article first appeared in the Wall Street Journal

Markets always make good scapegoats. When they do well, they are populated by profiteers. When they do badly, they are accused of causing trouble for everyone else.The denizens of the Dow, Nasdaq, CAC and DAX floors may be speculators and myopics. Yet it’s hard to find even the most reckless private participant who behaves as though his credit is limitless.

Standard&Poor’s, one of the three major credit rating agencies downgraded on Friday the USA credit rating, previously noted AAA, the highest possible level. The new rating AA+ is translating the worry of experts about the sustainability of US public finances, in the context of ever increasing public spending and public debt above $14.3 trillion. The debt deal signed by the Congress is projecting savings of $1.2 trillion, which S&P estimates to be insufficient.

This is the number of times the American Congress raised the debt ceiling in the last ten years. This is revealing systemic problems and, at some point, the incapacity of…

After a huge transfer-loan of €110 billion last year, Greece is once again pending on EU-IMF charity in order to avoid default, or at least, to benefit from a smooth default (assuming such a thing exists). Meanwhile, the Greek economy is paralyzed and tensions grow inside Greece as well as in other EU member states.

This is the amount of the public debt of Greece. Officials from the Eurozone are debating right now the possibility to accord additional money to the Greek government in a…

Portugal has undergone a huge change. There is a completely new political leadership: younger, better prepared, and much more open to the civil society. But even this “right wing” government lack the theory to understand the causes of the crisis Portugal currently faces, and thus seem unable to deliver real change.