Current Conditions and Outlook on Global Sovereign and Corporate Credit Markets - Edward I. Altman Ph.D.

A German cabinet minister rejected demands to involve the European Central Bank directly in efforts to reduce Greece's debt as international pressure is growing on the ECB to make a significant contribution to restructuring Athens' debt by accepting a haircut on its huge cache of Greek bonds. "This is not currently an issue for us," said German Economy Minister Philipp Rösler in an exclusive interview with Dow Jones Newswires and The Wall Street Journal, when asked whether the ECB should be involved in Greece's debt restructuring.

From the outside, it can be hard to know just who has the upper hand in the negotiations between Greece, the international community and holders of the Mediterranean country's bonds, Reuters reported. One day it appears Greece is close to reaching a voluntary restructuring of its sovereign debt. And the next, talks aimed at getting Greece's creditors to accept steep losses on those bonds are at a standstill. The talks have taken on the tenor of a labour negotiation, with leaks to the news media aimed at strengthening one side's bargaining position.

Last week the National Institute of Economic and Social Research, a British think tank, released a startling chart comparing the current slump with past recessions and recoveries. It turns out that by one important measure — changes in real G.D.P. since the recession began — Britain is doing worse this time than it did during the Great Depression. Four years into the Depression, British G.D.P.

Introduction

As per 1 January 2012 the safe harbour to qualify as professional market party ("PMP") within the meaning of the Act on the financial supervision (Wet op het financieel toezicht, "AFS"), has been increased from EUR 50,000 to EUR 100,000. This safe harbour amount is equal to the new safe harbour amounts which apply as per 1 January as exceptions to the licence requirements for offering units in investment institutions and investment obj

Over the next twelve months, expect unsettling developments, EconoMonitor reported. The global crisis is still unfolding, and it could escalate. Weakening growth, rising systemic risks, and contagion-prone markets are likely to enhance economic and financial fragility. We are entering a perilous new phase. First, growth will remain below potential, hindered by excessive debt. Since 2000, total world dues – the debt globally held by governments, corporations, and households – doubled (from 32 to 63 percent of global output), mostly in developed economies.

Just before Christmas, the European Central Bank flooded the financial markets with 500 billion euros -- a move that may not ultimately have the desired effect of stabilizing banks. Instead of passing that money on in loans to businesses to spur the economy, European banks have redeposited the money with the ECB at low interest rates, Spiegel Online reported. The sum of overnight deposits at the European Central Bank (ECB) is often considered to be an indicator of the level of fear brewing within the financial sector.

Europe's richest investors are moving money out of euros amid fears the single currency may not survive a sovereign debt crisis, with U.S. dollars and yen among the favoured destinations, bankers say, Reuters reported. One private banker at a global group, who specialises in clients worth at least $5 million, said his team had seen a pick up in clients fleeing the euro since Germany's central bank had to step in to prevent failure of a bond auction last month. He described the trend as "between a trickle and a flood", highlighting U.S.

European banks are dumping clients with US citizenship due to a new American law meant to curb tax evasion. The law would require financial institutions around the world to report on certain client activities. Compliance, say many banks, is way too expensive, Spiegel Online reported. The idea was to ensure that US citizens were paying their taxes on investments made through overseas banks.

An interruption from the floor briefly flustered Angela Merkel in a parliamentary debate on Nov 23. Had the German chancellor told the Bundesbank she wanted growth in Europe, challenged an opposition deputy - a jibe at the apparent policy contradiction with the Bundesbank's mandate to fight inflation. Merkel hesitated momentarily, then answered: "It's in my character to be consistent, whether I'm speaking with you, with party colleagues, with the Bundesbank or with my European partners. I am not duplicitous.