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Monthly Archives: November 2011

Italian Bond Yields Keep Marching Higher

Italian bond yields hit 6.23% and are fast approaching 7% which became a significant problem for Ireland. All this despite the ECB buying bonds in the open market.

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Greek Vote May End European Membership

(Reuters) – A Greek referendum on the bailout deal would be a vote on its euro zone membership, a Finnish minister said in a TV interview on Tuesday.

Greece’s Prime Minister George Papandreou on Monday called the unexpected referendum, citing the need for wider political backing for the fiscal measures and structural reforms demanded by international lenders.

The vote is seen bringing uncertainty back to markets and threatening Europe with a new crisis after euro zone leaders only last week agreed on the last-minute bailout deal.

“The situation is so tight that basically it would be a vote over their euro membership,” Alexander Stubb, the Finnish minister of European affairs and foreign trade, said in an interview with Finnish broadcaster MTV3.

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BREAKING: Greek Vote Threatens European Bailout

Greek Prime Minister George Papandreou called a referendum and a parliamentary confidence vote, raising the prospect of derailing the European bailout effort and pushing Greece into default. Stocks and the euro tumbled.

Papandreou’s gambit risks pushing the country into default if rejected by voters, and raises the ante with dissidents in his own party. Papandreou’s popularity has plunged after a raft of austerity measures cut pensions and wages, increased taxes and sparked a wave of social unrest. An opinion poll published Oct. 29 showed most Greeks believe the accord on a new bailout package and a debt writedown is negative.

“Papandreou could lose the referendum, which means that new elections would have to be called,” Thomas Costerg, European economist at Standard Chartered Bank in London, said in an e-mail. “Heightened Greek uncertainty could propagate to other fragile euro-area countries, in particular Italy.”

The 17-nation euro fell versus the dollar, dropping 0.6 percent to $1.3770 as of 8:49 a.m. in Berlin from yesterday in New York, when it sank 2 percent, the sharpest slide since August 2010. German government bonds opened higher, pushing the yield on the 10-year bund 16 basis points lower to 1.86 percent. The Euro Stoxx 500 Index sank as much as 4.2 percent.

Pacific Investment Management Co. Chief Executive Officer Mohamed El-Erian said the referendum call “is material and consequential.”

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