08 May 2010

Focus of the Week: GREECE crisis – World wide version

With Greece having trouble, it is now pulling other assets too:
  • US Dow Jones plunged as much as 9% on Thursday before recovering to end 3% down.
  • MSCI’s emerging markets index lost 11% since mid-April.
  • Crude oil price has fallen 14% over the past week, with Greek crisis putting the brakes on speculators as well as fears for Chinese growth.
  • Commodities indexes have lost 5% in a week.

The question in all investors mind this week would be:
When would this stopped?

To contain the infections, Euro zone leaders decided on Friday they have special measures ready before financial markets open on Monday to prevent financial turmoil in Greece spreading to other countries such as Spain and Portugal.

However, European Commission President Jose Manuel Barroso declined to give any details of the proposals, which will be presented to all 27 EU finance ministers for approval on Sunday.
The EU summit, called to discuss longer-term efforts to coordinate economic policies, turned into a crisis-management session, with the euro facing its stiffest test since its debut in 1999.

High deficits coupled with low economic growth has threaten Portugal, Spain and Ireland to follow the crisis leading path of Greece, most probably forcing them to seek financial aid too.
People worry that if Greece is Bear Stearns, Portugal is Lehman and Spain AIG”. BNP Paribas said during past week, a phrase that gained much circulation last week.

PIIGS (Portugal, Italy, Ireland, Greece, and Spain) can’t fly – the Greece problem. An article by Tan Sri Lin See-Yan saying that these countries need to seek IMF help before it was too late.
Hopefully, the share markets around the world would stop falling as intended by EU. 

1 comment:

  1. The only way for greece to solve their fiscal problems is to just declair a default and start over theirs no other solution.


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