European debt crisis in review

November 2, 2011 | Last updated on November 2, 2011
5 min read

The European Union says it has a plan in place to solve the debt problems plaguing the eurozone. But this crisis has been simmering for three years, and was decades in the making; can it be solved so easily?

Here’s a look back on some of the mre recent developments, including stories on how the impact has spilled over onto global markets, including Canada’s.

Be your clients’ best info source

As concerns about the European debt crisis continue and as signs emerge that the economic recovery is slowing, it’s a good time to think about how your clients might be reacting to what they are hearing and seeing and what you can do to give them some perspective. You can do this by helping them take a step back and apply a proper dose of some needed context. Let’s start by drawing on some broad concepts from behavioural finance.

Europe pulls out a debt plan

European leaders clinched a deal Thursday they hope will mark a turning point in their two-year debt crisis, agreeing after a night of tense negotiations to have banks take bigger losses on Greece’s debts and to boost the region’s weapons against the market turmoil.

Europe: An argument for active management

Since news of Europe’s banking and sovereign debt crisis broke in the latter part of 2009, sales of European equity funds have been in continuous decline, while the volatility of the MSCI Europe index has increased.

Europe on the cheap

Paul Ehrlichman can’t wait to see Greece finally default. “The country’s a fraud,” he says. “There is no hope.” With a one-year government bond yielding more than 100%, it’s as if the country has already defaulted, explains the head of global equity for Delaware-based Global Currents Investment Management. The sooner it goes under, the sooner Europe can start healing.

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All eyes on Europe

For the most part, from a macroeconomic perspective, this week was “more of the same” as investors continued to deal with the ongoing economic uncertainty caused by the ongoing debt problems in Europe. However, there were some economic statistics that were better than expected, but investors remained conservative looking for more positive results in the future before changing their perception of the global economy.

Europe remains a global challenge

If there is one upside to the European sovereign debt crisis, it may be that it allows the U.S. to look quite good in comparison. A “there but by the Grace of God” sense was in full display among the speakers at the recent CFA Institute Conference in Boston, Mass.

EU raids banks

The European Union’s competition watchdog said Wednesday it raided several banks’ offices in search of evidence that they may have colluded to manipulate euro interest rate derivatives.

Europe faces “horrifying choices”

The outcome of the European debt crisis is “genuinely unpredictable” with politicians facing “horrifying” choices, according to Martin Wolf, associate editor of the Financial Times, who spoke in Ottawa Monday at an event organized by Canada 2020.

Hidden value gems remain in Europe

Turbulence in euro-land is definitely something investors should be concerned about. But instead of panicking, they should remain objective and focus on quality, something they haven’t done for a long time, say those on the ground in the Old World.

Europe’s woes to continue

The debt crisis in the Eurozone periphery and the political debate over the debt ceiling in the U.S. are a “hangover from a rip-roaring, pre-crisis party” in much of the developed world.

German economy stalls as leaders meet

As the markets recover from the downgrade of America’s long-term debt, attention has turned back to the Old World. European leaders are debating the usefulness of a common euro-bond as a means of propping up the increasingly rickety monetary union.

Stick to gold and equities, avoid bonds

While there’s always a chance of catastrophe, the odds of an all-out financial Apocalypse are pretty long, according to Jurrien Timmer, director of global macro research and portfolio co-manager of the Fidelity Tactical Strategies Fund.

Opportunity lies under ruins of global economy

Unprecedented geopolitical and economic changes have left a trail of destruction, but they’re also breeding new investment opportunities around the world. A panel of investment pundits discussed where those opportunities lie and how to capitalize on them at Franklin Templeton’s 2011 Investment Forum, in Toronto.

Who’s to blame for global inflation?

Inflation, a global concern, is almost everywhere considered to be a monetary phenomenon. In reality, money is not what really drives inflation.

Europe attractive despite Greece

The hugely unpopular and controversial €28-billion Parliament-approved austerity plan aimed to bring Greece back from the brink of economic disaster has caused much chaos in the country. But for a nation plagued by dire budget problems, the austerity package of spending cuts and tax hikes is only the tip of the iceberg, experts point out.

Debt troubles rock Iberian Peninsula

Europe’s debt problems took a turn for the worse on Thursday, as the government of Portugal resigned and Spanish banks felt the sting of credit downgrades.

News poll

Canada surefooted in wobbly world

Having turned the corner in 2010, Canada’s economy continues to inspire a positive outlook despite some uncertainties, according to the latest Economic and Financial Outlook by Desjardins Economic Studies.

Commodities take a tumble: report

A slowing Chinese economy, renewed concerns over European debt crisis and the dawdling U.S. recovery are wrecking havoc on Canadian exports.

Volatility clips equity funds

The vortex of volatility that characterized markets in May took a toll on mutual fund returns, according to Morningstar Canada. None of the 43 Morningstar Canada Fund Indices was spared the financial contagion, as they all posted losses owing to mounting concerns over the growing Europeans debt crisis.