More things that make you go, “hmmm…”
Posted by Charles II on August 4, 2011
Jill Treanor and Nick Fletcher, The Guardian:
Amid the rout, it emerged that police acting on orders from the prosecutors of Trani, a port on Italy’s Adriatic coast, had raided the Milan offices of the rating agencies, Moody’s and Standard & Poor’s, as part of continuing investigations into their role in recent financial turmoil. The chief prosecutor in Trani told Reuters his office was checking to see whether the ratings agencies “respect regulations”.
There’s other interesting financial goings on.
Larry Elliott, The Guardian:
Banks took an especially severe pummelling amid fears that they were exposed to the two big concerns of investors: a break-up in the eurozone and a double-dip recession in the global economy.
The key issue is whether Italy and Spain will default. Krugman:
There are intimations that this could turn out to be more than a mere market plunge; European stresses are starting to make some nasty financial ripples that suggest a possible mini-Lehman event, although I think — I hope — governments and central banks will head this off. But if you had any doubts that we were on the wrong track, this should resolve them.
Meanwhile, Italy’s spread against German bonds is soaring even further. What are markets pricing in here? Default as a real possibility; maybe even euro breakup. The latter certainly sounds a lot more plausible now than it did a few months ago.
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