Capital Markets await the global crisis

The capital market risks increase

In brief: Economic collapse is coming on the world capital market. Market development is within a huge risk.

Capital markets are likely to threaten the very large-scale upheaval in the last hundred years, as governments around the world, particularly the euro zone and is unable to resolve the problem of public debt and budget deficits, points out in his prediction of Evolution Securities Ltd.

The decision of the European Union and the International Monetary Fund (IMF) on the allocation of 110 billion euros in Greece is not restored investor confidence in the stability of markets, by contrast, capital outflows from the government bond market in Europe with high levels of public debt has continued, credit-default swaps on bonds of Greece, Spain, Portugal and Italy again went up, and the euro has fallen off to a minimum since April 2009. “The capital markets may soon begin the largest in the last 100 years of financial crisis”, – said Head of strategy in the credit markets in Evolution Gary Jenkins. The EU will have to take additional measures to prevent further collapse in the markets, and the only thing that now can be done – to apply to the European Central Bank (ECB), requesting the infusion of funds into state bonds problematic countries, including Greece, says Mr. Jenkins. Most likely, Bank of the eurozone will buy debt securities on the secondary market, but in the case of Greece can be agreed that the ECB will finance the impending repayment of debt of Greece, said an analyst at ING Groep NV Padrayk Garvey. Buy state bonds will be for the ECB “is equivalent to the use of nuclear weapons: it will leave a stain on the political reputation of the ECB and worsen the ratio of its assets and liabilities, believes P. Garvey. Nevertheless, adds analyst, it seems that now is the last chance of Europe: “Only the ECB can print enough euros to save the whole system.” Alternatively, European governments can also make investors in the domestic market to buy state bonds, or simply wait until the situation itself does not improve, ironically analysts.

Igor Tringlers
2010-06-12 09:50, Economics.

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