All Entries Tagged With: "europeancentralbank"
Is Trichet Speaking Out of Both Sides of His Mouth?
On Thursday, the European Central Bank (ECB) opted to raise interest rates by 25 basis points. Following the decision, the bank’s president Jean-Claude Trichet held a press conference. During the press conference, Trichet spoke about the bank’s desire to fight inflation, while maintaining a hard stance on the ECB’s unwillingness to allow Greece to default. [...]
Greece: The Next Argentina?
About 10 years ago it appeared that Argentina was about to collapse under the combined weight of runaway inflation and unmanageable public debt. Capital was fleeing the country at near-supersonic speed as the government stubbornly maintained its fixed peg to the US dollar. Finally, the government repudiated its dollar peg, devalued its currency by about [...]
The Next Step for Greece (and the Euro)
Now that Greek Prime Minister George Papandreou has won a resounding vote of confidence in the country’s parliament, he can turn his attention to a few really difficult issues. In case you missed the irony in that sentence, Papandreou received 155 supporting votes, exactly 5 more than one-half of total votes cast. All 155 votes [...]
Ireland Raises Haircut Issue Again
The European Central Bank is not having a good week. The bank’s efforts to quell the rising likelihood of a Greek default, and all the bad things that would flow from that, aren’t getting any help from Ireland. Not that the ECB should have expected it. Ireland’s finance minister has once again suggested that some [...]
Greece Continues to Pressure Euro
It no longer may matter how the rest of the eurozone decides to deal with Greece and its sovereign debt. Both of the plans currently under consideration would be deemed a default. The European Central Bank and France want to persuade bondholders to roll their bonds into new issues when the existing bonds mature. Germany [...]
Eurozone Examines Two Nasty Options: Swap or Roll?
Ahead of the June 23-24 meeting of all 27 European Union members, the single currency portion of the EU is trying to reach an agreement on the second bailout package for Greece. Germany is supporting a proposal that would force Greece’s creditors to swap existing bonds for new bonds with a much longer maturity date. [...]
Euro No Longer Hostage to Greece?
Yesterday, ratings agency Standard & Poor’s cut Greek debt to the lowest possible rating: “CCC”. That’s three steps lower than the country’s previous “B” rating. Surprisingly, the EURUSD strengthened following the announcement, leading one to wonder what might be happening. First of all, S&P is the last of the three major rating services to issue [...]
Iceland Sells First Bonds Since 2008
Conventional wisdom may say that Iceland did everything wrong. Following a banking crisis in late 2008, the government nationalized the banks, devalued the Icelandic currency, and paid off depositors while forcing bondholders to write down investments. Ireland, another country with a failed banking system, chose instead to guarantee the assets of its major banks. This [...]
Germany Proposes Greek Debt Swap
Wolfgang Schaeuble, Germany’s finance minister, has sent a letter to the European Central Bank insisting on “voluntary participation of the private sector in case of a new aid package for Greece,” according to MarketWatch. In plain talk, that means that bondholders would be forced to take a writedown on their Greek bonds. Under Schaeuble’s plan, bondholders would [...]
European Inflation on the Front Burner Again
Now that Greece has reached an agreement with the “troika” of the European Union, the European Central Bank, and the IMF, forex traders are waiting to hear from the ECB on the inflation issue. Will the bank’s chairman once again declare that the ECB must exercise “strong vigilance” regarding inflation? The last time Jean-Claude Trichet, [...]
