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Falling debt against increasing GDP

MADRID | By Luis Arroyo | What good does it do a falling debt if nominal GDP is increasing? According to the Real World Economy in Greece, the households’ debt went as shown in the chart. That is, the nominal value of the existing debt has dropped, but it has increased in relation to the income or the GDP with which it is paid. And this, ladies and gentlemen, is the best expression of the Debt Deflation concept.

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China: Investing in the future

BEIJING | By Andy Xie via Caixin | Stimulus proposals won’t transform the economy in China, but spending on industrial research, building megacities and globalizing the white collar labor force will.

ECB joins the warning: beware of cheap debt

MADRID | By The Corner | As the Spanish sovereign bond is at minimums (2.8%) and the volume of debt has attained maximums (98%), Bankinter analysts point that low rates along with the large volume of issuances make European fixed income highly sensitivity to the risk premium ups and downs. High yield European firms are placing their bonds at historical minimum of 3.73%, when the average of the last 15 years is 10.19%. One of the risks the ECB is highlighting is the return of financial instruments that boosted banks’ leverage and resulted in the 2007 economic downturn. 

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Market chatter: Debt, stock and currency markets in full swing

MADRID | By Jaime Santisteban | Spanish Treasury broke a new record on Thursday amid the ECB’s easing hopes. “Spanish bonds reduced spread vs. the equivalent German benchmark almost 20 points in just a couple of days. Stock markets are moving forward without a clear direction, although uncertainty is smaller than in public debt markets” The Corner senior analyst Francisco López explains. 


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ATL: “Peripheral stocks have been investors’ wisest choice this year”

MADRID | By Jaime Santisteban | Investors looking for a safe heaven who bet on peripheral debt and stocks have seen their profits jump. “Holding Greek 10-year bonds has brought 20% profitability in just 4 months. Portuguese debt is also to highlight. Spanish 10-year bonds (over 6% profitability) are trading at a higher yield than the stock market index,” ATL Capital Strategy Director Marta Díaz-Bajo explains for The Corner.

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Greece lays out plans for debt relief from eurozone

ATHENS | By Macropolis | Greece is due to raise the subject of further debt relief at Monday’s Eurogroup but with the official sector poised to take a hit this time as opposed to the Private Sector Involvement (PSI) of early 2012. Monday’s is the first meeting of eurozone finance ministers since Eurorstat ratified Greece’s 2013 primary surplus and the last before European Parliament (EP) elections will be held in Brussels today.

Land of the Free and Home of the Debt

WASHINGTON | By Pablo Pardo | Does anybody remember where the Standard and Poor’s 500 Index was five years ago? At 666. Since then, the S&P 500 has gone up a whopping 175 percent. The market has defied fiscal cliffs, Republican obstructionism, three rounds of Quantitative Easing, the start of the Fed’s ‘tapering’, the change in Chinese leadership, the euro near-collapse, a nuclear catastrophe in Japan, a wave of revolutions in the Middle East, and even a Russian invasion of Crimea.

China, free fall?

Iris Mir | By mid-June the National Audit Office of China released a report unexpectedly detailing the debts of 36 local governments. It unveiled the chilling figure of 3.3 trillion dollar in debt, by the end of 2012. A 13% higher than in 2010. Furthermore, the lack of stimulus investment plans is fuelling scepticism among those who expected the Asian dragon to keep the world economy afloat. Mostly because the priority for China now is to reorient its model of growth with ambitious programs like the new Co2 emissions exchange.