Bankruptcy

Is Hungary the Next Domino to Fall?

By mcbride

Whether it is Hungary or Italy or some other European country, the Greek crisis is clearly not a Greek crisis, but a world wide debt crisis.  The European powers, read Germany, came to Greece?s rescue and there has been a predictable cooling off period since that rescue package was announced and implemented.  However, there are two problems: one, the crisis will continue as a. there was no debt forgiveness as a part of the package and b. there is no new Greek revenue (read taxes) to service its increasing mountain of debt, so new money in this situation simply acts as a temporary band aid.   The second problem is that Germany, like the US, cannot print money to rescue other countries forever, it will soon have a debt problem of its own to worry about.  Here is the latest information/speculation: ?The euro sank, with traders citing official comments on Hungary’s woes and rumors of derivative problems at Société Générale.  ?We won’t comment on market rumors,” a spokeswoman for France’s third-largest bank said, adding, ?if we had something to say, we would have said it.?  Its stock was recently down 6.7%.  HSBC Bank caused jitters with a research note to clients in which it downgraded Europe excluding the U.K. to underweight from neutral.?

Here is a link: http://online.wsj.com/article/SB10001424052748704764404575285842106470762.html?mod=WSJ_hpp_MIDDLENexttoWhatsNewsThird

Michael

Full post as published by Texas Lawyer Blog on June 04, 2010 (boomark / email).