News / Europe

European Markets Remain Volatile

Oscar Bernarl, economist at ING bank, checks the status of the financial markets on his desktop in his office in Brussels, August 8, 2011
Oscar Bernarl, economist at ING bank, checks the status of the financial markets on his desktop in his office in Brussels, August 8, 2011

European stock markets were volatile Monday despite the European Central Bank saying it intended to buy up government debt.

European Commission spokesperson Ollie Bailly said Monday that the measures taken by the European Central Bank should calm investors' jitters.

"All of the messages that came over the weekend from the G20, the G7, the different member states and the European Central Bank go in the right direction, in the good, in the same direction, and send a strong message of confidence to the markets and to the key players," Bailly said.  

The European Central Bank, or ECB, announced Sunday that it would buy Spanish and Italian bonds in order to stabilize the markets.  The move was designed to allay fears that two of Europe’s largest economies might default on their debts.

Already, the eurozone has bailed out three of its member nations -- Greece, Ireland and Portugal - to prevent them from defaulting.

S&P lists 5 pillars in its Sovereign Rating Framework as:

  • Institutional effectiveness and political risks, reflected in the political score
  • Economic structure and growth prospects, reflected in the economic score
  • External liquidity and international investment position, reflected in the external score
  • Fiscal performance and flexibility, as well as debt burden, reflected in the fiscal score
  • Monetary flexibility, reflected in the monetary score

    (Source: Standard & Poor's Sovereign Rating Framework)


On Monday, dealers said the ECB began buying Italian and Spanish debt as soon as European bond markets opened.

Initially the plan seemed to be working.  Yields on 10-year Italian and Spanish bonds fell dramatically, and the euro rose against the dollar.  

Nick Parsons, an economist at National Australia Bank, said the ECB had made the right move.

"It has been an absolutely critical decision, and I think we are going to have to see much more of this in the future if we are going to continue
this spread tightening," Parsons said.

But the gains were unstable; European markets slipped back in the afternoon.

Analysts say part of the problem is that investors are worried about the U.S. economy.  On Friday, the U.S. credit rating was downgraded, and on Monday, Wall Street stocks tumbled.

The U.S. is the world’s largest economy, and the state of its finances has global repercussions.  Shares in Japan, China, Taiwan and South Korea also plunged Monday.

Analysts say the problem in Europe is domestic as well.  The ECB and European leaders still, they say, have not made a concrete plan about what they will do next to cope with the European sovereign debt crisis and stagnating economies.

Vanessa Rossi from London’s Chatham House is an expert on the European economy.

She says, in the first place, it is not clear that the ECB has enough funds to keep Spain and Italy clear of the brink.

“I would have serious concerns that the amount of funding they would need to be able to make a real impact there will perhaps be more than the resources they wish to allocate,” Rossi said.

Government policy, she says, is not aimed at creating economic growth, and nations are relying on exports to keep their economies afloat.

"The difficulty is that governments virtually have no fire power left to provide any stimulus," Rossi said.

On Friday, Italian Prime Minister Silvio Berlusconi announced plans to balance the country's budget by 2013 - a year earlier than planned - while Spain has also promised to speed up cost-saving measures.

You May Like

Philippines, Muslim Rebels Try to Salvage Peace Pact

Peace process faces major setback after botched military operation to find terrorists results in bloody gunbattle between government forces, Moro Islamic Liberation Front fighters More

Republicans Expect Long, Expensive Presidential Battle

Political strategist says eventual winner will be one who can put together strongest coalition of various conservative groups that make up Republican Party More

Video New Wheelchair Is Easier to Use, Increases Mobility

Engineers have come up with a lever-operated design that makes use of easily accessible bicycle technology More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Liberia's Almost Last Ebola Patient Grateful but Still Grievingi
X
Benno Muchler
March 26, 2015 3:41 PM
Beatrice Yardolo was to make history as Liberia’s last Ebola patient. Liberians recently started counting down 42 days, the period that has to go by without a single new infection until the World Health Organization can declare a country Ebola-free. That countdown stopped on March 20 when there was another new case of Ebola, making Yardolo’s story a reminder that Ebola is far from over. Benno Muchler reports from Monrovia.
Video

Video Liberia's Almost Last Ebola Patient Grateful but Still Grieving

Beatrice Yardolo was to make history as Liberia’s last Ebola patient. Liberians recently started counting down 42 days, the period that has to go by without a single new infection until the World Health Organization can declare a country Ebola-free. That countdown stopped on March 20 when there was another new case of Ebola, making Yardolo’s story a reminder that Ebola is far from over. Benno Muchler reports from Monrovia.
Video

Video Cambodian Land Grabs Threaten Traditional Communities

Indigenous communities in Cambodia's Ratanakiri province say the government’s economic land concession policy is taking away their land and traditional way of life, making many fear that their identity will soon be lost. Local authorities, though, have denied this is the case. VOA's Say Mony went to investigate and filed this report, narrated by Colin Lovett.
Video

Video US, South Korea Conduct Joint Military Exercises

The Eighth U.S. Army Division and the Eighth Republic of Korea Mechanized Infantry Division put on a well orchestrated show of force for the media this week during their joint military training exercises in South Korea. VOA’s Seoul correspondent Brian Padden was there and reports the soldiers were well disciplined both in conducting a complex live fire exercise and in staying on message with the press.
Video

Video Space Program Status Disappoints 'Last Man on the Moon'

One of the films that drew big crowds last week at the annual South by Southwest festival in Austin, Texas, tells the story of the last human being to stand on the moon, U.S. astronaut Eugene Cernan. It has been 42 years since Cernan returned from the moon and he laments that no one else has gone there since. VOA’s Greg Flakus reports.
Video

Video Young Filmmakers Shine Spotlight on Giving Back

A group of student filmmakers from across the United States joined President Barack Obama at the White House this month for the second annual White House Student Film Festival. Fifteen short films were officially selected from more than 1,500 entries by students aged 6 through 18. The filmmakers and their families then joined the president and a group of celebrities for a screening of their films. VOA’s Julie Taboh reports.
Video

Video VOA Exclusive: Interview with Afghan President Ashraf Ghani

Afghan President Ashraf Ghani, during his first visit as president to Washington, gave a one-on-one interview with VOA Afghan Service reporter Said Suleiman Ashna, about his request for a change in U.S. troop levels, the threat from the Islamic State, and repairing relations with the United States and Pakistan. The interview was held at Blair House, late Sunday, in Pashto.
Video

Video California Science Center Tells Story of Dead Sea Scrolls

The ancient manuscripts were uncovered in the mid-20th century, and they are still yielding clues about life and religious beliefs in ancient Israel. As VOA's Mike O'Sullivan reports, an exhibit in Los Angeles shows how modern science is bringing the history of these ancient documents to life.
Video

Video Angelina Jolie Takes Another Bold Step

Hollywood actress and filmmaker Angelina Jolie has revealed she had her ovaries and fallopian tubes removed to lower her odds of getting cancer. Doctors say the huge publicity over her decision will help raise awareness about the importance of cancer screening. VOA’s George Putic has more

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More