And so the Grexit continues to be nigh: George Soros may handicap Greece’s June 17 election in favor of the pro-bailout parties deemed more likely to keep the nation in Europe’s monetary union, but better-safe-than-sorry still applies. If you’re a Greek saver, that may mean stashing some euros under your mattress. Read More
Austerity plans will be reexamined after elections in France and Greece, though one country is more likely to adopt radical change. Not all MF Global clients were created equal when it comes to recovering funds from the failed derivatives broker. Buffett says his investment in Goldman Sachs was just peanuts. Read about it in today’s Wall Street roundup.
Change of tide? François Hollande defeated Nicolas Sarkozy, as expected, in a runoff election, installing as French president a socialist party leader who has promised to revisit austerity plans negotiated between Mr. Sarkozy and German Chancellor Angela Merkel. In Greece, voters shifted support away from political mainstays to extreme parties, placing the future of austerity in that country in question. The “bitter reality” of the European economic situation may preclude Mr. Hollande from straying too far from his predecessor’s path.
In Greece, on the other hand, the election results increase chances that the country will exit the euro to 50-75 percent, according to two Citigroup economists, though they say that a broad break-up of the monetary union is unlikely.
Zero Hedge has your guide to Europe for Dummies.
Preferred customers: Some MF Global clients have recovered holdings from the failed broker, while others have yet to see a dollar, the Wall Street Journal reports. The difference: where the clients invested their money. Funds invested in the U.S. have been at repaid 72 percent, but regulatory quirks leave those with money invested overseas waiting to recover funds.
Seeking allies: Reuters digs into the state of affairs at Ally Financial, “one of the least scrutinized bailouts of the financial crisis,” and hears that mortgage-lending unit ResCap may be placed in bankruptcy within the next week. Ally, meanwhile, has been the victim of competing interests internally and lax government oversight. With indications that General Motors and Chrysler are less likely to auto loans to Ally, the Treasury’s 74 percent stake in the company could lose value. Read More
European leaders met last week in emergency session to hammer out a deal to stave off a disorderly default by Greece and to stabilize conditions in the continent’s sovereign debt markets. In extending more than $150 billion in contingent aid to Greece (including some hits taken by private creditors) and affording more flexibility in the use of the European Financial Stability Authority, the deal is an aggressive attempt to preempt further contagion.
That is an important consideration. From my discussions this week with colleagues in Germany and Switzerland, European central bankers and the core nations’ heads of state are acutely aware that they lack the tools to manage a wider crisis. Read More
SWITZERLAND—Europe’s intractable sovereign debt crisis engulfed Italy with surprising speed last week, forcing the adoption of $56 billion in austerity measures that are projected to bring the country’s budget into balance in 2014.
Once again, European leaders are working to contain the crisis, which has only now spilled over from the peripheral economies to one of the Continent’s largest. Read More
The euro tumbled to a 16-month low against the dollar on Friday, dropping to $1.3258, compared to a record high of $1.60 as recently as July. While this might be good news for New Yorkers tired of the tourist clog, the euro’s slide could be particularly bad news for a Manhattan housing market Read More
