Eurozone No Longer Under Threat Now Officially Contained

[Realistbear]

http://www.bloomberg.com/news/2011-01-25/europe-s-crisis-handling-is-winning-over-bond-investors-loeyttyniemi-says.html

Euro Area Is Winning Debt Battle, Loeyttyniemi Says

By Kati "Kate" Pohjanpalo - Jan 26, 2011 8:31 AM GMT

European leaders are winning over investors as they try to keep the single-currency bloc intact, raising the appeal of the region’s so-called rescue bonds, said Timo Loeyttyniemi, the head of Finland’s state pension fund.

“European policymakers are very motivated and decisive and will solve these problems,” said Loeyttyniemi, who oversees $19 billion in assets, in an interview in Helsinki yesterday. “The risk is euro-area risk, but

I think it’s very manageable as Europe is very determined.”

The European Financial Stability Facility is selling the top-rated bonds -- which are backed by euro nations

-- in an effort to give the bloc’s most indebted members access to affordable funding and quell speculation the region may face defaults. The EFSF’s first debt sale went ahead yesterday even after German, French and Austrian politicians expressed some opposition to the joint debt securities.

“There’s a lot of demand for this product, so I could envision that in the future there’s a liquid instrument,” said Loeyttyniemi.

Yesterday’s debut EFSF bond sale attracted orders for 44.5 billion euros ($60.7 billion) -- almost nine times the amount offered -- from more than 500 investors, the Luxembourg-based institution said. Japan bought more than 20 percent of the 5 billion euros of five-year bonds at an interest rate of 2.89 percent. The fund will disburse 3.3 billion euros to Ireland on Feb. 1 with the remaining proceeds retained as a cash buffer to ensure the top AAA rating.

Wow--what an incredible turn around and how painless it all was. There were many who thought the Eurozone was in trouble with the possibility of other countries apart from Ireland needing help. Not so it seems, confidence is high and debt is all AAA rated. The bonds must be AAA as they are actually backed by Euro nations--can't get anything safer than that.

As Timo says, he thinks its all contained (manageable).

Edited January 26, 2011 by Realistbear

[interestrateripoff]

I'm just relieved that the biggest threat now to stability is wage increases.

I hope the ECB have got an eye on that as well.

[Realistbear]

On the other hand:

http://www.bloomberg.com/news/2011-01-25/greece-default-with-ireland-breaks-euro-by-2016-in-global-poll.html

Greece Default With Ireland Breaks Euro by 2016 in Global Poll

By Simon Kennedy - Jan 26, 2011 8:28 AM GMT

Most global investors predict at least one nation will leave the euro-area within five years and that Greece and Ireland will default, sentiment that is intensifying pressure on policy makers to strengthen their response to the debt crisis.

As the World Economic Forum’s annual meeting gets underway, 59 percent of respondents in a Bloomberg Global Poll said one or more of the 17 euro nations will quit by 2016, including 11 percent who see an exit within 12 months. Respondents were divided over whether Portugal would default, while a majority expressed confidence in Spain.

The global poll seems to suggest Timo is wrong and that the oversubscribed Euro bonds may not reflect the underlying reality. IMO, such debt is not so easily swept away. A desperate propgnada campaign must be underway to try to restore confidence.

[Gone baby gone]

I'm just relieved that the biggest threat now to stability is wage increases.

If the BoE deal with wage increases as effectively as they dealt with inflation, it'll be 10% pay rises all round!

[Realistbear]

http://www.bloomberg.com/news/2011-01-26/strauss-kahn-bailing-out-euro-gives-imf-s-chief-popularity-sarkozy-misses.html

Strauss-Kahn Bailouts Give IMF Chief Popularity Over Sarkozy

By Richard "Dick" Tomlinson and Sandrine "Sandy" Rastello - Jan 26, 2011 12:01 AM GMT

As the dinner plates were cleared on a May night in Basel, Switzerland, International Monetary Fund Managing Director Dominique Strauss-Kahn and his fellow guests settled in for a challenging final course: saving the euro from extinction..../

The rise and rise of the Bankster class who are taking over the Eurozone and sidelining polticos such as Sarky.

[Ruffneck]

A large part of the reason Spain is bankrupt is because they invested so much in the phony 'green' economy that costs 2.2 jobs for every 1 job created.

['Bart']

It's contained.