The large budget deficit of Greece drew the attention of investors worldwide to high debt levels in many developed countries and cause a strong earthquake in global financial markets in May, which affected most stock exchanges in Eastern Europe. Unprecedented levels of debt in countries such as Spain, Ireland, Portugal, Britain and the U.S. and the eurozone’s inability to respond adequately to its fiscal difficulties led to an outflow of investors from the euro and the securities markets worldwide. Most, however, suffered exchanges in Eastern Europe, led by Ukraine and Greece, and that in Romania. Expected main Greek ASE stock index was one of the losers in the world, has lost 17 percent in May and increased its loss this year to just over 29%. In early May, Greece have access to a rescue fund of 110 billion euros, but worries that this will only increase the indebtedness of the country without resolve its economic problems prevailed. Sharp decreases in the Athens Stock Exchange led the country’s financial regulator to ban for two months short sales of shares in late April. Shortly thereafter Germany surprise ban on short sales of shares of the largest banks and insurance companies in the country until March 31 next year. The unexpected move of the country, which was not consistent with its EU partners, has provoked a wave of sales of stock exchanges worldwide. Greece’s budget deficit amounted to 13.6 percent of its gross domestic product (GDP) in 2009 and the government develop a program for reducing it to 4.9% in 2013. In Estonia, which also carried harsh fiscal reforms to reduce its budget deficit, the main stock index OMX Tallinn decreased by 10.4 percent in May, but is still 35% above its level of last December.
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“AAA” rating of the U.S. designated by Moody’s, remains stable, although federal finances have weakened due to the cost of stabilizing the financial system and economy. U.S. rating is supported by the fact that the country has the largest economy in the world have flexible markets and open trade regime, said in a statement the rating agency. Maintaining a stable ratings outlook to the U.S. shows that Moody’s does not expect a change in the next 12 to 18 months. Worries about the level of federal debt rose after the financial problems of peripheral eurozone countries led the European Union and the International Monetary Fund bailout package grant of nearly 1 trillion. dollars for countries with huge debts, such as Greece, Portugal and Spain. Finance USA were significantly weakened by the credit crisis, recession and government programs to combat these problems. U.S. budget deficit rose to 1.4 trillion. dollars in 2009 and reached approximately 10% of GDP. Washington expects this year it reached 1.6 trillion. dollars. U.S. President Barack Obama has appointed a panel of outside experts to suggest ways to improve the fiscal position of the country. “The ratio of government debt to GDP and the revenue is deteriorating sharply and after the crisis is expected to remain higher than that of other countries with” AAA “rating indicated by Moody’s.
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The stock market indexes in Asia and Pacific region continued to rush down and fell for the sixth straight session today. Since the beginning of this month, only two sessions have brought stock growth indexes in the region, May seems to be the worst for them from September 2008 onwards. Sale of shares, mainly from the banking and extractive sector MSCI Asia Pacific fell by another 1.4 percent to 111.83 points today, it pulled down to its lowest level in nine months. He has lost 13 percent to its highest point this year, scored about a month ago, cited by Bloomberg. Its loss from the beginning of this year increased to 7.2 percent after today’s session, only within the last five sessions MSCI Asia Pacific has yielded a 6.9 per cent, which is its biggest weekly decline since February last year ever. Exchange pessimism of investors increase this week after Germany introduced a ban on uncovered short sales of shares of the largest banks and insurance companies, and on speculative purchases of government bonds of 16 countries that make up the eurozone. Japan’s Nikkei 225 index slid 2.5 percent to 9 784.54 points and ranked among the losers in the region indicators. Bank of Japan announced today that it began granting loans against interest rate of 0,1% of commercial banks in Japan after leaving the base rate in the country unchanged.
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The finance ministers of the eurozone countries defended the euro as early this morning issued a joint statement that it is the currency credible. This happened after yesterday’s collapse of the single currency to its lowest level against the U.S. dollar for the past four years. Financiers had a meeting that lasted until late tonight, but their overall opinion came early this morning. Its purpose is to influence the direction of reducing fears hitting the financial markets in recent weeks, said AP. The main concerns of investors related to the large expenditure cuts in the eurozone, which are made to reduce debt. This can lead to growth retardation, which came against the backdrop of inflation for programs to increase liquidity in the euro area. Because of these fears the euro fell to its lowest levels against the dollar from April 2006 to date yesterday, but continued to gold more expensive for investors since it has the status of the island life in times of crisis. Eurogroup President Jean-Claude Juncker said confidence all 16 ministers of the euro in the future. “We believe that the euro currency, which can be believed,” he said, presenting the general opinion. “Price stability has been operated successfully for 11 years, will continue. This is an important feature of the euro and a major asset for investors, “said Juncker. The meeting of eurozone finance ministers held a day before the meeting of finance ministers of all 27 EU member states. On it is expected to reach agreement on new rules to regulate hedge funds.
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Finance ministers of 16 countries of the euro area’s economic growth expected area of the single European currency in 2010 to be “fragile” but positive, about 1%. In 2009, the eurozone has experienced the worst recession in its history, as the gross domestic product (GDP) fell by 4 per cent. In the fourth quarter of last year growth was only 0.1 percent, reports agency Reuters. Expectations of ministers who had the extraordinary meeting is to inflation in the eurozone rose by an average of around 1.3 percent this year. What will hamper the development is the labor market situation, unemployment will continue to rise until 2011, warn experts. Many companies that have low utilization, you will be able to maintain jobs. One of the most important reasons for the refund will be renewed confidence in financial markets, which currently is still quite fragile. Most major central banks kept interest rates at around zero, and this increased demand and purchase of assets with higher interest. Eurozone inflation rose to an average of around 1.3 percent in 2010.
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In the second half of 2009 75% of SMEs in the EU have received the full amount or part of those seeking bank loans. However, institutions have refused credit to 18 percent of the companies. Reported that the European Central Bank (ECB) in a study published today for access to European business and finances. The study was carried out in the period between 19 November-December 18, 2009, and there are 5 320 companies participated in the euro area. Nearly half of these firms stated that their needs in bank lending does not change the past six months. However, about 25 percent said they had a greater need for loans, but for only 10% of the companies needs bank loans were lower. While 42% of businessmen believe that the ability to take a bank loan in the second half of 2009 have deteriorated. For comparison, in the first half 43 percent of businesses gave a bad evaluation of access to funds from banking institutions. Only 10% see improvement of the system. Their number remains unchanged from the first half. 75% of the businessmen said that they received the loan for which they applied. In the first half of 2009 a total of 77 percent of companies participating in the quiz, said they have received funds or demand of them. 18% of the companies, however, is denied a loan. In the first half of last year’s loan from a banking institution was denied to 12% of the companies.
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Waving his finger across Europe to Greece because of the crisis, which threw the country eurozone. Only those responsible for this collapse are not only in Athens. Is guilty and the European Union, who for years pretended to be blind, summarizes his analysis in radio Deutsche Welle. Greek crisis affects the whole world. Nobody was expecting that the volatile budget policy of the small country can entrust to the extent financial markets. In this crisis can provide a significant blame for its European partners have in Athens.
Silence Brussels
Already in the 1990’s experts have warned that the adoption of a country with such a debt in the euro area is very risky. At present, the Greek government manipulated statistics, which was a kind of open secret. EU do not notice this, because entry into the euro area was more political than economic decision. EU has no choice. The intervention is that different levels in the euro area and structures will align itself with time, it was pure illusion from the outset. Indeed, the euro even deepen the differences. Seduced by the lack of exchange rate and low interest rates, gained courage billion due to steady flow from Brussels to Athens, the Greeks allowed their wealthy lifestyle that would have been unthinkable during the national currency – coin. Alarm signals had all the time, but they were ignored: high inflation, budget deficit. And Europe is doing, they could not.
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The level of unemployment in the euro area in December rose to 10.0% with expectations for a rise to 10.1 percent after 9.9 percent in November, according to figures from Eurostat. We recall that the original data for November showed an unemployment rate of 10%. Thus the unemployment rate for December was at the highest levels since August 1999, but its weaker than expected increase may signal a worsening slowdown in the labor market in order to pursue recovery of the eurozone economy from recession. The preliminary index of consumer prices in the eurozone for January rose by 1.0% annually. after growth of 0.9 percent in December and also reached 11-month high. Still retains a level below the ECB’s desired level of 2.0%.
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Bulgaria will be investigating an individual for membership in the eurozone, Boyko Borisov offered to Prime Minister during his meeting with Germany’s Chancellor Angela Merkel. I am concerned when we talk about Bulgaria, to talk about herself. The German government can ensure a fair chance to speak for an entire region and for each country individually and for its efforts. What the answer to question Angela Merkel of Germany’s support for Bulgaria’s membership in the eurozone and Schengen, police agency Focus. Evrzonata assessment is currently being given by the European Commission and European Central Bank. They will decide what make predictions, how to meet the criteria. Here, national governments do not intervene. But I am about this – when we talk about Bulgaria, Bulgaria and talk about anything to complement the measures.. Germany’s chancellor, adding that bilateral economic cooperation could be strengthened. Became clear that directors of major energy companies Germany will hold talks with Bulgarian representatives for inclusion in our big energy projects, it became clear during the visit of the Bulgarian delegation in Berlin. During the visit of the Bulgarian delegation was signed an intergovernmental agreement on avoidance of double taxation and the deviation from the taxation of income and wealth. It was initialed by the Chief Secretary of the Council of Ministers of Bulgaria and Dr. Rosen Zhelyazkov and Peter Ammon State Secretary in the Foreign Ministry of Germany.
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