90 seconds at 9 am: Europhoria fades within a day as Germany rejects Greek pro-bailout party request to soften bailout; Spanish 10 yr bond yield hits 7.18%; NZ$ firm over 79 USc on safe haven demand

Here's my summary of the key news overnight in 90 seconds at 9 am, including news the eurphoria that boosted Asian stock markets 2% yesterday after pro-bailout parties appeared to win Greek elections faded within hours overnight.

Greece's pro-bailout New Democracy party, which has three days to form a coalition government, immediately asked for a softening of the bailout plans. But German Chancellor Angela Merkel just as quickly rejected the request, saying Greece needed to stick to its bailout agreement and any change would be 'unacceptable.' See more here at Reuters.

The euro fell and European banking stocks fell sharply, as much because there were fresh rises in Southern European bond yields on fears about slowing growth and the future of the Euro-zone and its banking system.

The Spanish 10 year bond yield rose to a euro-era record high close of 7.18%, having hit a high of 7.29%. See more here at Bloomberg.

The Italian 10 year bond yield rose to 6.08%, which is also seen as unsustainable in an economy with more than 2 trillion euros of debt.

Meanwhile, the leaders of the world's 20 largest economies are meeting in Los Cabos in Mexico. The Euro crisis is at the centre of discussions and expectations are growing about some sort of concerted action to ease the crisis. All the focus of financial markets will be on the US Federal Reserve's latest monetary policy decision on Wednesday night New Zealand time.

There were even calls for massive indiscriminate buying of Southern European bonds by the European Central Bank with printed money, although these suggestions are vehemently opposed by Germany. See more here at Bloomberg.

Meanwhile, the Euro fell to a two week low and oil prices fell 0.8% on fears about a slowing global economy. The Dow closed down 0.2%.

However, the New Zealand dollar remained firm over 79.3 USc as investor worries about a slowing economy were offset by expectations of fresh money printing in America and Europe, which would weaken their currencies relative to non-money printing economies such as Australia and New Zealand.

The New Zealand dollar rose to a two month high of 63 euro cents overnight. See more here in Mike Jones' currencies report.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment or click on the "Register" link below a comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.


I see it is as an analogy . The Euro is like a terminal cancer patient , there is no cure to the debt problem ( cancer) and it is being kept alive with all sorts of medication like stimulus packages , austerity , and quick fixes , none of which is working to solve the underlying debt problem .
The Euro as a concept was a good idea and worked well to remove trade barriers and market distortions , but was fundamnetally flawed in its implementation and managment .
Its will all come apart ....... eventually.

Since it is terminal, then what about some pain relief :-P 

The Spainish 100 billion bailout was called the "one day wonder" as the euphoria lasted only a day.
The Greek Election is now claaed the "one hour wonder" as the stock market euphoria lasted only for one hour before losing all gains.
Seems like the firepower of the Eurocrats is getting more and more watered. Big Bazooka has now become toy water pistol.
The world has finally accepted that it is all a big Con Game by the Bankers and their friends in politics and Central Banking. 

Woah, nice one Andrew. This belongs with that article on out bailout loans to the IMF. Hopefully Bernard will give it a Top Ten status and even more hopefully that it become the impetus to scratch a bit deeper into the money trail backed by the New Zealand taxpayer.

Nice one Andrewj, a very interesting and well researched article.

Interesting piece. Just seen after Top 10 out.
This is what the Euro-crisis is all about.
Who will pay for the unsustainable debts and asset prices. The fight is all about making sure someone else (taxpayers, Germans, ECB, etc) pays.

Whatever the Eurocraps do to loan more fake money and impose austerity on club med countries it cannot solve the underlying problem that those countries will remain unable to generate a sufficient surplus to pay either the interest or capital previously borrowed. The EEC as a method to improve the freedom to trade and travel was good, the common currency was a disguised attempt by Germany to control Europe by setting the value of the mark unrealsitically low when it was exchanged for the Euro and Germany must accept some responsibility for this and lending via its Banks the money to club med to purchase it goods - those historic surpluses will ultimately be used in some form to pay off the bad debts from club med. There have been no good choices for years now there are only awful or catastrophic ones and the longer this charade goes on the more likely is catastrophy, but if this exposes and punishes the Bankers , Eurocraps and politicians responsible it may still be worth the pain to avoid another repitition in the future. The sheer arogance and impotence of the above demonstrates they know nothing and understand less, the wisdom of the herd is frequently better overall, John Key should note his refusal to discuss let alone negotiate on matters of superannuation and asset sales may ultimately be his downfall and ruin what otherwise could and should be a sucessful navigation through a perfect storm. 

Euro phoria..!  Did Bernard come up with that all on his own.