Forget Merkel And Sarkozy: Saint Geithner To The Rescue

In the wake of Papandreou's Call for Voter Referendum on EU Debt Deal sovereign debt yields plunged in Germany and surged higher in most other European countries, but most notably Italy and France.

By Carlos X. Alexandre:cI get the PIIGS acronym and the implied meaning, but going forward, and having run out of food, the PIIGS will eat the FIGS – France, Italy, Germany and Spain. And yes, I know there’s an overlap, but cannibalism is also an option. In short, the FIGS are ripe for the picking, and the question is whether someone will harvest them up before they fall off the tree and rot away. Now there’s talk that the European Central Bank will lend money to the IMF, which in turn will lend to the euro members.

By Carlos X. Alexandre:cAs the stock market was ready to take another nasty dive on Tuesday, the Financial Times reported that “EU ministers look at bank aid plans,” and the market recovered in style with the price action easily visible on a 5 minute chart.

THE years immediately prior to the crisis and up to now were characterised by an enormous run-up in sovereign debt across the rich world. This spike in borrowing has had few recent historical precedents; among advanced economies only the growth in debts associated with the Great Depression and the World Wars were comparable. And historically, it has been extremely difficult to address debts of these magnitudes.

Does Europe need more hedge funds? That was one of the more intriguing questions to come out of a one-day seminar on Europe's sovereign debt crisis I attended this week in Brussels. The event was co-sponsored by the IMF and Bruegel, the respected European think tank, and it was held under the Chatham House Rule, which means I can't tell you who said what. But I can give you a few headlines.

Edward Hugh submits: After a long and rather tense wait, the initial response to the publication of the European bank stress tests was always going to be something of an anti-climax. Indeed the results should hardly have comes as a surprise to anyone It is hardly breaking news to learn that a number of Spanish cajas will find themselves badly undercapitalised if the economic recovery – as surely might be expected – fails to materialise as planned.

ETF Database submits: Just when many investors thought that the world economy was finally back on track, European debt markets were rocked by a crisis of confidence that sparked fresh concerns of a double dip recession and prolonged period of economic contraction. The sovereign debt crisis began earlier this year in Greece, but in recent months has been threatening to spread to much larger economies across Europe, including Italy and Spain.