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Stocks Sink on U.S. Credit Outlook as Euro Falls on Debt Crises
U.S. stocks sank the most in a month, oil slid and gold rose to a record after Standard & Poor’s cut the American credit outlook to negative and concern about Europe’s debt crisis worsened. Greek two-year bond yields surged to 20 percent for the first time since at least 1998.
The S&P 500 tumbled 1.6 percent to 1,298.09 at 1:13 p.m. in New York and the Stoxx Europe 600 Index slid 1.7 percent. Ten- year Treasury yields lost three basis points to 3.38 percent as concern about Europe’s finances overshadowed S&P’s move. The euro lost 1.4 percent to $1.4227, while Portuguese debt- insurance costs rose to a record. The S&P GSCI index of 24 commodities slid 1.3 percent as oil and cocoa tumbled.
S&P assigned a one-in-three chance it will lower the U.S. rating in the next two years, saying the credit crisis and recession that began in 2008 worsened a deterioration in public finances. Budget differences among Democrats and Republicans remain wide and it may take until after the 2012 elections to get a proposal that addresses the concern, S&P said.
“This is another indication of the need for the U.S. to better control its fiscal destiny, both for its sake and that of the global economy,” said Mohamed El-Erian, chief executive officer at Newport Beach, California-based Pacific Investment Management Co., the world’s biggest manager of bond funds. “Absent credible medium-term fiscal reform, every segment of U.S. society would be faced with higher borrowing costs, a weaker dollar and a less bright outlook for employment, investment and growth.”
Broad Decline
Commodity, industrial and technology companies had the biggest Read more…
Setbacks in Portugal and Ireland Renew Worry on Debt Crisis
Allied Irish Bank is one of several prominent financial institutions in Ireland in need of a rescue.
LONDON — A higher-than-expected budget deficit in Portugal and the need for more money to rescue Ireland’s failing banks have renewed fears that Europe’s debt crisis is worsening despite its sizable bailout fund.
Officials in Lisbon said Thursday that the country’s budget deficit last year was 8.6 percent of its gross domestic product, well above the goal of 7.3 percent. Although officials said the revision would not affect the government’s goal of reaching a deficit of 4.6 percent of domestic product in 2011, the news was a reminder that, even after the problems from Greece’s fraudulent deficit statistics, some numbers from the euro zone remain unreliable.
Also Thursday, Ireland’s central bank announced that four of the country’s most prominent financial institutions would need an additional 24 billion euros to cover sour real estate loans, a move that pushes the Read more…
World powers agree to set up contact group to map out Libya’s future
“Participants of the conference agreed to establish the Libya Contact Group,” said a statement issued by Mr Hague, who chaired Tuesday’s meeting of more than 35 countries plus the UN and Nato.
“Qatar has agreed to convene the first meeting of the group as soon as possible,” the statement said.
The group will provide “leadership and overall political direction to the international effort in close co-ordination with the UN (United Nations), AU (African Union), Arab League, OIC (Organisation of the Islamic Conference) and EU (European Union) to support Libya.”
The London conference was called to map out Libya’s future following the fighting between forces loyal to the country’s leader, Muammar Gaddafi, and rebels opposed to his four-decade rule.
Britain, France and the United States had launched military strikes on Libya ten days ago to Read more…
EU to ban cars from cities by 2050
The European Commission on Monday unveiled a “single European transport area” aimed at enforcing “a profound shift in transport patterns for passengers” by 2050.
The plan also envisages an end to cheap holiday flights from Britain to southern Europe with a target that over 50 per cent of all journeys above 186 miles should be by rail.
Top of the EU’s list to cut climate change emissions is a target of “zero” for the number of petrol and diesel-driven cars and lorries in the EU’s future cities.
Siim Kallas, the EU transport commission, insisted that Brussels directives and new taxation of Read more…
Is the European Union on the brink of Collapse?
Foto: THOMAS BORBERG (arkivfoto)
A real risk of disintegration if the EU does not soon display solid internal and external cooperation.
Europe’s external divisions on Libya are as great as its internal divisions on the new Europact.
Over the past few days, EU countries have faced historically difficult decisions without being able to reach agreement.
The indecision has seriously questioned the determination that European countries are able to muster, both in NATO and in the European Union.
The countries seem to have reached agreement on handing over the responsibility for the Libya operation to NATO. The breakthrough has, however, come so late that credibility has already been lost.
For once, Denmark has stood out in a positive light by both sending fighter aircraft to Read more…
Portugal’s Government May Collapse Before EU Summit
In a report published by Reuters, the Portuguese parliament is expected to reject government austerity measures on Wednesday, which could lead to the collapse of the minority Socialist administration one day before the EU summit.
The country’s Prime Minister, Jose Socrates, has declared that he will resign if the plan is defeated, due to the fact that its rejection would force debt-ridden Portugal to seek a similar international bailout to Greece and Ireland.
If Socrates stands by his word, then he appears to be heading for the exit door as all opposition parties have proposed resolutions calling for the rejection of the measures, which would look to cut the debt by reducing pensions and state spending.
The main opposition is the Social Democrats, and the party has already begun talking about a snap election. When asked if it is likely that the government will step down, Socialist bench leader in parliament Francisco Assis said that, “If all these positions that now seem irreversible are confirmed, then yes.”
“The prime minister does not want to resign, but he cannot govern against his convictions,” Assis said.
Pressure on Portugal After New Credit Downgrade
LISBON — Portugal’s borrowing costs pushed higher after Moody’s downgraded the country’s credit rating, stoking the pressure on the country’s beleaguered minority government.
The yield on Portugal’s ten-year bond rose 0.04 percentage point to 7.44 percent. The equivalent yields for Greece and Spain, two other euro countries struggling with high borrowing levels, were down modestly.
Moody’s Investors Services cut the country’s rating by two notches to A3 late Tuesday, saying the debt-stressed country is struggling to generate growth and faces a tough battle to restore the fiscal health needed to calm jittery financial markets.
Prime Minister Jose Socrates said late Tuesday he would quit if Parliament doesn’t consent to his government’s latest batch of contested austerity measures.
Portugal aims to raise up to €1 billion in a sale of Read more…
Soros: Communist Chinese Model Of Order May Become “The Envy Of The World”
Billionaire investor George Soros has once again cited China’s dictatorship as the model for the rest of the world in a speech at an elite gathering in Europe.
Soros told the exclusive Travellers Club, that “China’s model of state capitalism, in which the interests of the individual are subordinated to those of the government, poses a danger if its example becomes“the envy of the world.”
“Perfect order and global governance are not realistic expectations.” Read more…
Middle East Unrest Could Harm WMD-Free Zone Talks
Protesters chant slogans on Saturday during a demonstration outside an Egyptian state security building in the outskirts of Cairo. Recent political instability throughout the Middle East could complicate efforts to establish a regional weapons of mass destruction-free zone, current and former officials said (Wissam Nassar/Getty Images).
The unrest and revolutions sweeping through the Middle East have raised doubts over the potential for regional nations to hold previously planned talks focused on forming a weapons of mass destruction-free zone, Arms Control Today reported in its March issue (see GSN, March 1).
At the 2010 Nuclear Nonproliferation Treaty review conference in New York, member nations agreed to hold a 2012 meeting on “the establishment of a Middle East zone free of nuclear weapons and all other weapons of mass destruction.”
“We are absolutely committed” to the WMD-free zone meeting, White House WMD point man Gary Samore said in an interview last month. “But there’s a lot of uncertainty because of the unrest in the Middle East.”
In the last two months, longstanding regimes in Tunisia and Egypt have fallen, and protests in Libya have escalated into full-scale fighting between militants and forces loyal to Col. Muammar Qadhafi. Protests have also erupted in Bahrain, Jordan, Oman and Read more…
Scientists warn of ‘dangerous over-reliance’ on GPS
(AFP)
LONDON — Developed nations have become “dangerously over-reliant” on satellite navigation systems such as GPS, which could break down or be attacked with devastating results, British engineers said Tuesday.
The Royal Academy of Engineering said the application of the technology was now so broad — from car sat-navs to the time stamp on financial transactions — that without adequate backup, any disruption could have a major impact.
It cited a recent European Commission study showing that six Read more…
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