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Tuesday, February 12, 2013

Euro zone's debt stabilizes as north-south split emerges

Euro zone's debt stabilizes as north-south split emerges | Reuters: "A divide now exists between France and Germany on the one hand, where debt fell slightly in the third quarter from the second, and the economies of Ireland, Greece, Portugal, Spain and Italy, whose debt-to-GDP ratio rose in the July-September period. Debt in Ireland, where a burst real estate bubble forced the country into an international bailout, reached 117 percent of economic output in the quarter, while the number was 127 percent in Italy. Spain saw its burden tick up to 77 percent of GDP, and the Commission sees it reaching 97 percent in 2014. Greece's debt rose to 153 percent of GDP in the quarter and will reach 189 percent in 2014, although a deal struck by euro zone finance ministers and the International Monetary Fund in November aims to take it down to 124 percent by 2020. Rising debt is particularly worrying for Italy and Spain, the euro zone's third- and fourth-largest economies, which are in recession and need growth to cut debt and unemployment."

I.M.F. Forecast - Global Economic Growth Modest at Best - NYTimes.com: "“If crisis risks do not materialize and financial conditions continue to improve, global growth could be stronger than projected,” the Washington-based fund said in its economic report. “However, downside risks remain significant, including renewed setbacks in the euro area and risks of excessive near-term fiscal consolidation in the United States. Policy action must urgently address these risks.”"

‘Strong Dollar’ Is Lie Told in New Currency War - Bloomberg: "Jack Lew’s first act once he becomes U.S. Treasury secretary will be to tell a lie. On Day One as Timothy Geithner’s successor, Lew is bound to say “I support a strong dollar” to reassure markets that there will be no change in long-standing U.S. policy. Nothing could be further from the truth, though, as the yen trades at 2 1/2-year lows and the world considers a response to Japan’s blitz on money markets."Get ready for the Currency Wars 2.0. In a world in which growth is harder to come by, policy making verges on becoming a zero-sum game. Officials in the U.S. and China were caught flatfooted by how quickly Japanese Prime Minister Shinzo Abe turned the tables in currency markets with a few vague pledges of change. Rest assured that some big responses are on the way.

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