The former president of the European Central Bank also told CNBC the shutdown signals "enormous difficulty" for the nation's democratic processes.» Read More
The Italian government is still wrangling over how best to balance its budget, losing credibility with key leaders and opinion formers.
The world will still be "paying the piper" for several more years because of the debts that mounted before the global financial crisis, Arnab Das, managing director of Market Research and strategy, at Roubini Global Economics told CNBC.
International Monetary Fund staff have provoked a fierce dispute with eurozone authorities by circulating estimates showing serious damage to European banks’ balance sheets from their holdings of troubled eurozone sovereign debt. the FT reports.
"Inflation fears at the start of the year were always something I was skeptical about and which I always thought were overdone," Bob Parker, senior advisor at Credit Suisse, told CNBC. However, he added he was concerned that inflation could become an issue in 2013.
Some European financial institutions should have taken bigger losses on their Greek government bond holdings in recent results announcements, according to the body that sets their accounting rules in a letter seen by the FT.
With speculation growing that the Fed could pull the trigger on QE3 next month and the ECB buying up bonds in the euro zone, analysts at ING in Amsterdam have been asking if it is possible for a central bank to go bust.
German “bad bank” agencies holding billions of euros of Greek debt have still to decide whether to join a bond swap designed to cut Athens’ refinancing burden as part of an EU bail-out, the FT writes.
In Jackson Hole Wyoming on Saturday Jean-Claude Trichet, the president of the European Central Bank was due to give a speech to a meeting of policy makers hosted by the Federal Reserve. As he prepared to speak the euro zone faced huge problems.
On July 21, EU leaders, the European Central Bank and the International Monetary Fund agreed on a second rescue package for Greece, one they hoped would put the country in a position to come to grips with its debts. That deal is now looking like it could fall apart.
Fed Chairman Ben Bernanke has spoken, and now it's European Central Bank President Jean-Claude Trichet's turn. Here's how to trade the central banker-speak.
Given the European Union's issues when it comes to credit, Jean-Claude Trichet's comments may be more important than Bernanke's, with Tim Backshall, Credit Derivatives Research.
The world could be heading into another fully fledged credit crisis, according to Satyait Das, the author of Extreme Money: Masters of the Universe and the Cult of Risk.
In any murder mystery film, it pays to watch the boring gray man (or woman) in the corner; quiet, unobtrusive characters can be deadly. So, too, in finance. Four years ago, the giant US money market funds seemed some of the dullest actors in the global financial scene. But in 2007, they quietly helped to spark the crisis in the mortgage-backed securities world.
Chris Wheeler, bank analyst at Mediobanca joined CNBC to discuss the latest news on the European markets and what would happen if the Greek bailout fails.
While markets are hyper-focused on the Friday speech at Jackson Hole by Fed Chairman Ben Bernanke, they are overlooking what could be an equally important Saturday appearance by IMF Managing Director Christine Lagarde.
On July 21, EU leaders agreed to a second bailout for Greece, one that was supposed to draw a line under the euro zone debt crisis and give the new government in Athens a chance come to grips with the huge debts it inherited when it was elected. One month later, and the situation appears to be getting worse rather than better, according to Simon Derrick, the head of currency research at Bank of New York Mellon.
"I think the German PMI announcement will have an impact on spread widening, because investors will see it as an indication that the world is slowing, Germany is slowing, and in general, risk is increasing," Adrian Schmidt, FX strategist at Lloyds Bank Corporate Markets, told CNBC.
European leaders are being pushed into closer fiscal union sooner than they had anticipated by volatile markets concerned over a dearth of ideas on how to solve the sovereign debt crisis in the euro zone, analysts and investors told CNBC.
"Everything (Merkel and Sarkozy) talked about has been in place since 1999. This is a play for the gallery to buy more time," Steen Jakobsen, chief investment officer at Saxo Bank, told CNBC in a discussion on the meeting between the French and German leaders on Tuesday.
"It has been only Germany in the driving seat for a long time. Now it seems as if the balance of power is shifting a little bit towards the rest of the European countries," John Hydeskov, senior analyst at Danske Bank, told CNBC.