Obama warns of default danger amid US Shutdown

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Amid the US wide shut down, the American President Obama has warned that Wall Street should be concerned that a conservative faction of Republicans is willing to allow the country to default on its debt.

It may be recalled that the US government has been partially closed after Congress failed to agree a budget. If corrective measures are not timely applied and unless  the debt ceiling is raised, there is a likelihood that the country will  and will run out of cash on 17 October.

Already, the shut-down has left more than 700,000 employees on unpaid leave and closed national parks, tourist sites, government websites, office buildings, and more.

Read more about it at: BBC News
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Spain pledges to avoid full bailout

Spanish prime minister Mariano Rajoy said the "credibility of the euro won" in Saturday’s request by his government for as much as €100 billion in European Union aid to restructure the nation’s banks.

"Yesterday, the credibility of the euro won, yesterday the future won," Mr Rajoy said yesterday at a press conference in Madrid. "Yesterday, the European Union won." 

Without planned reforms and deficit reduction, what happened on Saturday "would have been an intervention" instead of "the opening of a credit line," Mr Rajoy went on to say.

read details: Irish Examiner

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Signs indicating an 'End' to European Financial Crisis

There are more and more signs that the plumbing of the European financial system is starting to work.

The latest, as FT reports, is that money market funds are once again buying European bank paper.

Last year, money market funds were sellers of many European banks’ short-term commercial paper as worries grew about the repercussions of a possible European sovereign default. That was a critical factor in market anxiety, as the highly rated funds’ $2.7tn in liquid assets are a key source of dollar funding.

Read more: Business Insider

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A Fiscal Policy Game-Changer In 2012?

[ via Business Insider ] 8 Jan

A lot of time and effort is spent analyzing what the US Federal government will do with regards to spending. The bad news, from a growth point of view, is that there's very little scope for the government to do more, for political reasons. 

The good news is that it's too politically costly to actually cut spending, so despite the seeming salience of spending cuts, it never actually happens. And at least for 2012, government spending "cuts" won't subtract too much from growth.

Read more: Business Insider

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A new EU in the making - with Germany in charge

[ The New York Times ] 10 Dec

Europe’s worst financial crisis in generations is forging a new European Union, pushing Britain to the sidelines and creating a more integrated, fiscally disciplined core of nations under the auspices of a resurgent Germany.

New EU - less England

German Chancellor Angela Merkel persuaded every current member of the union except Britain to endorse a new agreement calling for tighter regional oversight of government spending. The accord, approved at a summit meeting in Brussels early on Friday, would allow the European Court of Justice to strike down a member’s laws if they violate fiscal discipline.

Read full report for details

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