{"id":1015,"date":"2012-05-15T07:00:00","date_gmt":"2012-05-15T07:00:00","guid":{"rendered":"http:\/\/starthostunlimiteddmffassi-ss.stackstaging.com\/bondworld.ch\/home\/sites\/20b\/7\/760c69a11c\/public_html\/investmentworld.ch\/index.php\/2012\/05\/15\/viewpoint-the-european-debt-crisis-has-seen-three-important-developments-sp-646269291\/"},"modified":"2012-05-15T07:00:00","modified_gmt":"2012-05-15T07:00:00","slug":"viewpoint-the-european-debt-crisis-has-seen-three-important-developments-sp-646269291","status":"publish","type":"post","link":"https:\/\/www.investmentworld.eu\/ch\/viewpoint-the-european-debt-crisis-has-seen-three-important-developments-sp-646269291\/","title":{"rendered":"Viewpoint:  The European debt crisis has seen three important developments"},"content":{"rendered":"<p style=\"text-align: justify;\"><span lang=\"EN-GB\"> <\/span>The European debt crisis has seen three important developments, of very different nature: the elections in Greece, which confirmed the difficulty in forming a government capable of managing the crisis and to guarantee the continuity of international aid; an acceleration of banking system restructuring in Spain; Mr. Hollande\u2019s election as President of France, which implies some risk, but also the opportunity to improve the economic management of the euro area&#8230;<span lang=\"EN-GB\">.<\/span><span lang=\"EN-GB\">..<\/span><strong><span lang=\"EN-GB\"> <\/span><\/strong><span lang=\"EN-GB\"> <\/span><span lang=\"en-GB\"> <\/span><\/p>\n<p>  <!--more-->  <\/p>\n<ul> <\/ul>\n<ol><\/ol>\n<ol><\/ol>\n<ol><\/ol>\n<ol><\/ol>\n<hr \/>\n<p> Sign up for our free newsletter to receive weekly news from BONDWorld<br \/> <a href=\"index.php?option=com_acymailing&#038;view=user&#038;Itemid=107\"><strong>Click  here to register for your free copy<\/strong><\/a><a href=\"index.php?option=com_acymailing&#038;view=user&#038;Itemid=1023\"><strong> <\/strong><\/a>  <\/p>\n<hr \/>\n<p style=\"text-align: center;\"><strong>For professional investors and advisers only<\/strong><\/p>\n<hr style=\"text-align: justify;\" \/>\n<div style=\"text-align: justify;\">&#8211; In the past week, the European debt crisis has seen three new, important developments. The first is without doubt negative: the general election in Greece resulted in a ungovernable Parliament. The success of forces opposed to the austerity measures, but lacking credible alternative plans, has created strong expectations of the Greek crisis reaching a dramatic climax in a matter of months. For the time being, the Eurogroup has given its go-ahead to the payment of 4.2 billion euros of the bailout package tranche due, retaining one billion as a warning of what would happen if the new government opts not to abide by the commitments made by Papademos. Immediate recourse to new elections, in the hope that they will yield a majority capable of governing, would probably reward the more radical formations;  therefore, the more moderate parties could ultimately decide to coalesce to avoid a further contraction of their presence in Parliament and an immediate economic disaster. But what would happen if the new majority decided not to comply with the terms of the bailout? At that point, financial aid would in all likeliness be suspended, Greece\u2019s monetary sovereignty be restored, and the country\u2019s debt, including debt towards the ECB, the IMF, and euro area lender countries, would be restructured. Greece (with no currency reserves and a monthly trade deficit of around two billion euros) would take a leap into the unknown, facing real risk of economic activity and foreign trade coming to a standstill. In the euro area, given the loss of the funds already issued, the aim would be to avoid the payment of a large portion of the loans due to be settled by the EFSF as part of the second bailout package, worth 109.1 billion euros.<\/p>\n<p>&#8211; The second important development is the acceleration in the management of the Spanish banking crisis. All the parties involved seem to have acknowledged that without a credible quantification and delimitation of the problem, it will not be possible to restore confidence in Spain. The partial nationalisation of Bankia, the possibility of an independent audit being ordered of the real estate assets of banks, and the new decree, approved today, raising of bank provisions, are three important steps towards accurately quantifying financial requirements and, subsequently, isolating the problem and understanding the size of European aid that will be necessary to achieve stabilisation.<\/p>\n<p>&#8211; Lastly, Francois Hollande\u2019s election as new President of France has upturned European political balances, opening up the possibility of redefining the Franco-German axis responsible for the mismanagement of the crisis in the past few years. The development implies both risks and opportunities. The main risk is that the change could bring about a weakening of control over public accounts, rather than making control more intelligent: such a mistake would be dangerous for France, that could risk an erosion of its credit standing, and could prove fatal for countries, like Italy, which have suffered an interruption of foreign capital inflows. Opportunities include focusing more on the credibility of consolidation plans, confirming emphasis on structural balances rather than on absolute ones, the adoption of shared measures in support of growth, and a strengthening of the structure of financial and economic aid mechanisms. Success is by no means guaranteed, and may even be unlikely in the latter case: many actions require unanimous decisions, and in the euro area a wide majority is not enough to secure change.<\/p><\/div>\n<hr \/>\n<p> <strong>Appendix<br \/><\/strong> <\/p>\n<p style=\"text-align: justify;\"><strong>Analyst Certification<\/strong><br \/>The  financial analysts who prepared this report, and whose names and roles  appear on the first page, certify that: (1) The views expressed on  companies mentioned herein accurately reflect independent, fair and  balanced personal views; (2) No direct or indirect compensation has been  or will be received in exchange for any views expressed. Specific  disclosures: The analysts who prepared this report do not receive  bonuses, salaries, or any other form of compensation that is based upon  specific investment banking transactions.<\/p>\n<p><strong>Important Disclosures<\/strong><br \/>This  research has been prepared by Intesa Sanpaolo S.p.A. and distributed by  Banca IMI S.p.A. Milan, Banca IMI SpA-London Branch (a member of the  London Stock Exchange) and Banca IMI Securities Corp (a member of the  NYSE and NASD). Intesa Sanpaolo S.p.A. accepts full responsibility for  the contents of this report. Please also note that Intesa Sanpaolo  S.p.A. reserves the right to issue this document to its own clients.  Banca IMI S.p.A. and Intesa Sanpaolo S.p.A. are both part of the Gruppo  Intesa Sanpaolo. Intesa Sanpaolo S.p.A. and Banca IMI S.p.A. are both  authorised by the Banca d&#8217;Italia, are both regulated by the Financial  Services Authority in the conduct of designated investment business in  the UK and by the SEC for the conduct of US business.<br \/>Opinions and  estimates in this research are as at the date of this material and are  subject to change without notice to the recipient. Information and  opinions have been obtained from sources believed to be reliable, but no  representation or warranty is made as to their accuracy or correctness.  Past performance is not a guarantee of future results. The investments  and strategies discussed in this research may not be suitable for all  investors. If you are in any doubt you should consult your investment  advisor. <br \/>This report has been prepared solely for information  purposes and is not intended as an offer or solicitation with respect to  the purchase or sale of any financial products. It should not be  regarded as a substitute for the exercise of the recipient\u2019s own  judgement.<br \/>No Intesa Sanpaolo S.p.A. or Banca IMI S.p.A. entities  accept any liability whatsoever for any direct, consequential or  indirect loss arising from any use of material contained in this report.  <br \/>This document may only be reproduced or published together with the  name of Intesa Sanpaolo S.p.A. and Banca IMI S.p.A.. Intesa Sanpaolo  S.p.A. and Banca IMI S.p.A. have in place a Joint Conflicts Management  Policy for managing effectively the conflicts of interest which might  affect the impartiality of all investment research which is held out, or  where it is reasonable for the user to rely on the research, as being  an impartial assessment of the value or prospects of its subject matter.  A copy of this Policy is available to the recipient of this research  upon making a written request to the Compliance Officer, Intesa Sanpaolo  S.p.A., 90 Queen Street, London EC4N 1SA.<br \/>Intesa Sanpaolo S.p.A. has  formalised a set of principles and procedures for dealing with  conflicts of interest (\u201cResearch Policy\u201d). The Research Policy is  clearly explained in the relevant section of Banca IMI\u2019s web site  (www.bancaimi.com).<br \/>Member companies of the Intesa Sanpaolo Group, or  their directors and\/or representatives and\/or employees and\/or members  of their households, may have a long or short position in any securities  mentioned at any time, and may make a purchase and\/or sale, or offer to  make a purchase and\/or sale, of any of the securities from time to time  in the open market or otherwise. Intesa Sanpaolo S.p.A. issues and  circulates research to Qualified Institutional Investors in the USA only  through Banca IMI Securities Corp., 245 Park Avenue, 35th floor, 10167  New York, NY,USA, Tel: (1) 212 326 1230. Residents in Italy: This  document is intended for distribution only to professional investors as  defined in art.31, Consob Regulation no. 11522 of 1.07.1998 either as a  printed document and\/or in electronic form. Person and residents in the  UK: This document is not for distribution in the United Kingdom to  persons who would be defined as private customers under rules of the  FSA.<br \/>US persons: This document is intended for distribution in the  United States only to Qualified Institutional Investors as defined in  Rule 144a of the Securities Act of 1933. US Customers wishing to effect a  transaction should do so only by contacting a representative at Banca  IMI Securities Corp. in the US (see contact details above). <br \/><strong><br \/>Valuation Methodology<\/strong><br \/>Trading  Ideas are based on the market\u2019s expectations, investors\u2019 positioning  and technical, quantitative or qualitative aspects. They take into  account the key macro and market events and to what extent they have  already been discounted in yields and\/or market spreads. They are also  based on events which are expected to affect the market trend in terms  of yields and\/or spreads in the short-medium term. The Trading Ideas may  refer to both cash and derivative instruments and indicate a precise  target or yield range or a yield spread between different market curves  or different maturities on the same curve. The relative valuations may  be in terms of yield, asset swap spreads or benchmark spreads.<br \/><strong><br \/>Coverage Policy And Frequency Of Research Reports<\/strong><br \/>Intesa  Sanpaolo S.p.A. trading ideas are made in both a very short time  horizon (the current day or subsequent days) or in a horizon ranging  from one week to three months, in conjunction with any exceptional event  that affects the issuer\u2019s operations. In the case of a short note, we  advise investors to refer to the most recent report published by Intesa  Sanpaolo S.p.A\u2019s Research Department for a full analysis of valuation  methodology, earnings assumptions and risks. Research is available on  IMI\u2019s web site (www.bancaimi.com) or by contacting your sales  representative.<\/p>\n<p>Source: BONDWorld &#8211; Intesa Sanpaolo \u2013 Research Department<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The European debt crisis has seen three important developments, of very different nature: the elections in Greece, which confirmed the difficulty in forming a government capable of managing the crisis and to guarantee the continuity of international aid; an acceleration of banking system restructuring in Spain; Mr. Hollande\u2019s election as President of France, which implies [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":3455,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"telegram_tosend":false,"telegram_tosend_message":"","telegram_tosend_target":0,"footnotes":"","_wpscp_schedule_draft_date":"","_wpscp_schedule_republish_date":"","_wpscppro_advance_schedule":false,"_wpscppro_advance_schedule_date":"","_wpscppro_dont_share_socialmedia":false,"_wpscppro_custom_social_share_image":0,"_facebook_share_type":"","_twitter_share_type":"","_linkedin_share_type":"","_pinterest_share_type":"","_linkedin_share_type_page":"","_instagram_share_type":"","_medium_share_type":"","_threads_share_type":"","_google_business_share_type":"","_selected_social_profile":[],"_wpsp_enable_custom_social_template":false,"_wpsp_social_scheduling":{"enabled":false,"datetime":null,"platforms":[],"status":"template_only","dateOption":"today","timeOption":"now","customDays":"","customHours":"","customDate":"","customTime":"","schedulingType":"absolute"},"_wpsp_active_default_template":true},"categories":[50],"tags":[],"class_list":["post-1015","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-weekly-analysis"],"blocksy_meta":{"styles_descriptor":{"styles":{"desktop":"","tablet":"","mobile":""},"google_fonts":[],"version":6}},"_links":{"self":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/posts\/1015","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/comments?post=1015"}],"version-history":[{"count":0,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/posts\/1015\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/media\/3455"}],"wp:attachment":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/media?parent=1015"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/categories?post=1015"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/tags?post=1015"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}