30-12-2014, 09:54 AM
Contagion risk of euro-out is well-contained? May be, but I always assume Mr. Market is unpredictable...
Why Greece's spillover across euro area will probably be contained this time
BRUSSELS (Dec 30): Greece's flirtation with an exit from the euro in 2011 and two cliffhanger elections in 2012 prompted the darkest days of the debt crisis, halted only by the European Central Bank's pledge to save the currency come what may.
Now, with the collapse of another Greek government, Europe’s leaders, its more vulnerable economies and financial markets are better prepared.
While euro in-or-out threats will echo through the Greek election campaign, the spillover across Europe this time is likely to be contained.
“We’re looking at a Greece problem -- the euro crisis is over,” Holger Schmieding, chief economist at Berenberg Bank in London, said by phone.
“The euro crisis was all about contagion risk. I do not expect markets to seriously contest the contagion defenses of Europe.”
Investor reaction to the Greek parliament’s failure to pick a president traced the familiar north-south divide.
Greek stocks and bonds plunged and markets were buffeted in Italy, Portugal and Spain, while funds flowed into Germany, Europe’s biggest economy and hard-money bastion.
Yet look closer and Italy, the euro zone’s second most-indebted country after Greece, is nowhere near a fiscal calamity.
Ten-year borrowing costs are hovering around two percent, compared to over seven percent at the height of the crisis.
Bond holders are charging Italy 144 basis points more than Germany to borrow, a far cry from 553 basis points in November 2011.
...
http://www.theedgemarkets.com/sg/article...ained-time
Why Greece's spillover across euro area will probably be contained this time
BRUSSELS (Dec 30): Greece's flirtation with an exit from the euro in 2011 and two cliffhanger elections in 2012 prompted the darkest days of the debt crisis, halted only by the European Central Bank's pledge to save the currency come what may.
Now, with the collapse of another Greek government, Europe’s leaders, its more vulnerable economies and financial markets are better prepared.
While euro in-or-out threats will echo through the Greek election campaign, the spillover across Europe this time is likely to be contained.
“We’re looking at a Greece problem -- the euro crisis is over,” Holger Schmieding, chief economist at Berenberg Bank in London, said by phone.
“The euro crisis was all about contagion risk. I do not expect markets to seriously contest the contagion defenses of Europe.”
Investor reaction to the Greek parliament’s failure to pick a president traced the familiar north-south divide.
Greek stocks and bonds plunged and markets were buffeted in Italy, Portugal and Spain, while funds flowed into Germany, Europe’s biggest economy and hard-money bastion.
Yet look closer and Italy, the euro zone’s second most-indebted country after Greece, is nowhere near a fiscal calamity.
Ten-year borrowing costs are hovering around two percent, compared to over seven percent at the height of the crisis.
Bond holders are charging Italy 144 basis points more than Germany to borrow, a far cry from 553 basis points in November 2011.
...
http://www.theedgemarkets.com/sg/article...ained-time