Wednesday, Oct 07, 2009

Latvia first.. how long before the UK suffers same fate. Beginning of the end for paper?

Marketwatch: The Latvia domino may be ready to fall

LONDON (MarketWatch) -- It's never good news when a government bond auction fails. It's particularly bad news when an auction fails for a note maturing in just six months. And it's really bad news when there isn't any bid at all.
Yet that's what happened Wednesday when Latvia tried to sell close to $17 million of paper.

Posted by doom&gloom @ 04:50 PM (1383 views)
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1. little professor said...

Complete failure of the Thatcher-Reagan free market philosophy. The country is doomed.

Wednesday, October 7, 2009 05:15PM Report Comment

2. little professor said...

Latvia is back in the eye of the storm. A row between the Baltic state and its Nordic neighbors over the country's compliance with an international agreement to cut its spending has again raised fears of a lat devaluation. The Swedish krona tumbled Wednesday and Latvia failed to sell one of three bonds it was auctioning.

Nordic governments are threatening to withhold the latest tranche of a €7.5 billion ($11.03 billion) bailout package unless Latvia cuts spending by 500 million lats ($1.04 billion) in 2010. So far, Latvian Prime Minister Valdis Dombrovskis has only offered to cut LVL325 million.

Meanwhile, Mr. Dombrovskis has raised the stakes by threatening a new law limiting Latvian homeowners' mortgage liabilities to the value of their homes rather than the value of their loans. That has raised fears he is preparing the way for a devaluation. Most Latvian mortgages are denominated in foreign currency and house prices have fallen 70% from their peak, according to Danske Bank. Devaluation would saddle homeowners with soaring debts, but Mr. Dombrovskis's proposal would transfer much of the risk to Nordic banks that are the main lenders to the Latvian mortgage market.

Wednesday, October 7, 2009 06:33PM Report Comment

3. Fortuneftb said...

How will this impact the price of lapdances and stripper limo rides in Riga ?

Wednesday, October 7, 2009 06:40PM Report Comment

4. mountain goat said...

In some ways this region represents the very height of the wave of optimism that led to the recent credit bubble. The cold war was over, we won, and the countries behind the iron curtain grabbed at the chance to rejoin Europe. Our economic system of freedom and democracy was superior, we were all going to become unimaginably wealthy. Reach up and buy that dream home with no money down, it's all boom boom boom from here...

Wednesday, October 7, 2009 07:47PM Report Comment

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