No Solution for Greek Government
February 10, 2012 | 07:34 AM
Posted by David Mason
Treasuries are on the rise as European leaders attempt to pressure Greece into implementing serious austerity measures. The uncertainty regarding the decision of the Greek government has caused investors to search for U.S. debt and flee Asian stocks, which are on the decline this morning. The main problem being faced by the Greek government is that the demands of the European Commission and the people of Greece conflict. European leaders want the austerity measures as a precondition to the bailout, while the Greek people are no longer willing to tolerate any measures influencing pensions and wages. It is entirely possible that internal pressure on Greek politicians from the people will prevent the bailout from coming into fruition.
U.S. banks settle over foreclosures
A massive 25 billion Dollar settlement will force five large banks in the United States to compensate around one million borrowers. The claim against the banks was foreclosure abuse and a portion of the settlement will go towards reduction in loan principle. The EUR/USD is down this morning by 0.20% and trading at 1.3258.
Trade Balance report today
The Trade Balance report will be released today in the United States. This report provides the differential between the value of imported and exported goods. Customer Sentiment will also be released today. Fed Chairman Ben Bernanke will speak at the 2012 National Association of Homebuilders. Similar to the Chairman’s speeches at government functions, expect volatility in the markets as a result.
Chinese trade slumps
China’s trade balance experienced its largest declined since the financial crisis in January of 2008. Exports dropped by 0.5% when compared to the previous years, while imports fell sharply by 15%. A partial explanation for the slowdown in the Chinese economy is the Lunar New Year holiday, yet there is no denying that the global recession is inflicting pain on China’s economy. Some economists believe that China has a huge credit bubble which may prove to be catastrophic for the country’s future prospects.
Oil continues to rise
Oil continues to show strong gains, currently trading at 99.61 USD per barrel. Crude oil prices are on the rise in part due to better than expected employment numbers in the United States. The understanding that Greek officials have taken the actions necessary for the next bailout also contributed to rise in oil prices. This understanding proved to be misguided, but investor sentiment remains confident that an agreement will be reached.