The debt crisis of the euro area member states, like a domino series of outbreaks in general. Greece, Ireland, Portugal, Spain and Iceland, before the crisis in countries such as the poor financial situation of the euro approached a step by step into the abyss. This was established nearly 20 years of regional economies, is experiencing an unprecedented test.
Multi-country's fiscal deficit in the EU can not be improved ongoing concerns, the euro-zone government bond prices of credit default swaps have climbed to record highs on the 3rd, the European government bond CDS index also hit a new high of joint and several.
Affected by this bad against the euro continued to hover in the 7-month low; and on the 4th of the European stock markets fell sharply, hitting a 10-week biggest one-day drop.
Bloomberg's data show that 3, the Portuguese government bonds CDS rose 29 basis points to 196 points, a record high; Italian government bonds CDS on that day rose 9 basis points to 131 points for the 10-month high; the Spanish government bonds CDS has risen to nearly one-year high. In addition, the Greek and the Irish government bonds, CDS also by a significant rise in 13 and 5 basis points.
Credit default swaps (CDS) is a financial derivative product, is often used to measure the level of default risk debt, CDS higher the price of the contract on behalf of the parties signing the contract, the greater the likelihood that the bond defaults.
Pacific Investment Management Company (Pimco), CEO and Director, Mohammed Elian joint venture that "continued expansion of the public balance sheet, this year will be a sovereign debt in high-risk year."
Yu Yin Yu Lie of the sovereign debt crises
Credit Derivatives Research released a report that investors competing to sell the first bonds and corporate bonds of various governmental, Greece, Portugal and France in September last year, since the growth of sovereign credit risk of the most significant. In the 81 largest country, there are 16 countries, an increase of the credit risk of more than 50%, of which Greece's sovereign credit default swaps rose from 9 months to more than 250%. Portugal credit default swaps rise in second place, 217%; followed by France (122%), Spain (111%), United States (100%) and Japan (95%), which are home before the credit risk increases state.
As early as December 9, 2009, the U.S. ratings companies Standard & Poor's credit to Spain observation rating from "stable" lowered to "negative", and warned that Spain will face long-term economic growth recession. At the same time, Standard & Poor's rating outlook will be in Portugal to negative. In this day before the Fitch Ratings Ltd. announced that Greece's sovereign credit rating from "A-" downgraded to "BBB +".
In fact, after the financial crisis, not just Greece, almost all countries through large-scale investment to revive its economy, the national debt rising sharply accelerated.
2009 Greek GDP, the deficit will account for 12.7%, while Spain's GDP, the deficit accounted for 11.4%, Portugal 9.3% deficit of GDP, these countries public deficits in excess of the EU under the Stability Pact, the 3% minimum standards. And if a country's assets and economic growth can not afford their heavy debt burden, the country's sovereign default risk on the increase.
Amendment to the global debt market risk premium, some countries may thus borrow from nowhere. Some foreign exchange reserve, the debt due to the larger countries unable to repay sovereign debt due debt have to face the risk of default.
The investors, such risks have been found. At present, the measure of a barometer of sovereign default risk - credit default swaps (CDS) rates have recently increased, indicating that investors think there sovereign default risk has increased.
Once this risk among investors accumulate the stock market then flew responded. Thursday, European stock markets fell sharply, hitting a 10-week biggest one-day drop. Euro-zone's largest bank Banco Santander plunged 9.4%, although its strong full-year profit in 2009. However, analysts pointed out that the current investors and the market is more worried about Spain's economic prospects and the country's credit rating.
The test of time usher in the euro
CDS prices rise to make the euro's continued pressure on the 4th, the day the European market early trading, the euro against the U.S. dollar exchange rate hovered around 1.3868 U.S. dollars, or about 0.2%. 1, the euro-dollar exchange rate has hit a 7-month low of 1.3860 U.S. dollars, the data compared to the year 2009 high of 1.514 U.S. dollars has been a sharp depreciation of 8.39%.
February 4, according to Reuters news agency quoted a bank trader as saying that the euro-dollar exchange rate would be around 1.3850 U.S. dollars to find strong point, if the exchange rate below that level, the euro fell to 1.3700 U.S. dollars may eventually may even be dropped to 1.3500 U.S. dollars.
Despite the recent euro exchange rate Zeng analysts expect a continuous decline further depreciation of the euro, but the Reuters news agency recently released a survey showed that although the financial situation of the Eurozone worries still exist, but the euro's decline against the U.S. dollar should be very limited .
Analysts surveyed by Reuters believes that the market for smaller financial situation of the euro area countries there may be some of excessive speculation, after all, governments have managed to gradually freed itself from the worst since World War II recession.
62 analysts surveyed, only 11 are willing to bet 12 months after the euro-dollar exchange rate will be decreased by another 0.10 to 1.30 U.S. dollars or less. Mizuho Corporate Bank technical analyst Nicole Elliott is expected 12 months after the euro-dollar exchange rate will be reported in the vicinity of 1.59 U.S. dollars. In addition, the survey also showed that the median analyst forecast, Greece, the need to seek outside help to solve the financial difficulties of the probability is about 30%.
Greek financial plan approved
3 European Commission conditionally approved the Greek government proposed three-year financial plan. But the executive also said that if the Greek government announced measures to cut the deficit large enough to reach the goal, the EU will require the State to further reduction in public sector pay. According to the Greek government's plans to take the country by 2012, deficit of the gross domestic product (GDP), accounting for 12.7% from 2009 down to 3%.
3, the European Commission pledged to strictly follow the spending of Greek austerity plan to address this most serious of the euro zone sovereign debt crisis. European Commission also demanded that the Greek Government to be in mid-March to report to reduce a huge deficit and the progress report once every quarter thereafter. Analysts believe that the purpose of this part is out of the Greek government deficit of no confidence in statistical data.
It is estimated that the public debt this year, the size of Greece or the equivalent of 120% of gross domestic product, the country's concerns about possible non-compliance has affected the entire euro area. However, the Prime Minister Papandreou said that Greece was a victim of a large-scale speculation, speculation pushing up the euro zone hit a record high cost of borrowing, Greece.
As the financial plan approved by the EU, the market for the time being able to ease fears in Greece, but for the entire euro area credit crisis, concerns have had no end. Analysts believe that Portugal and Spain, two countries have become new focus of market attention. Local 4, the Portuguese Parliament will finance the transfer of the area, held a law to vote, the law could undermine efforts to reduce the deficit. In addition, the Spanish government on the 3rd of its 2010 budget deficit to GDP ratio increased to 9.8%, which is also added to market anxiety.
At present the euro zone sovereign debt default risk undercurrent surging, and in this year's Davos forum, with many experts believe that the sovereign debt crisis will affect economic development in an uncertainty.
