THE EUROZONE ERUPTS
By: Hope Wilkos, Writer/Blogger Photographer: George Whylie Videographer: Maxine NolanThis is a key time for Europe and stocks are riding on the outcome of the various events that will take place within the next few days. Thursday, June 14th, was a good day for the volatile stock market with the anticipation of unfolding events in Europe. The Dow Jones Industrial average closed on a positive note as it inched up 156 points.
It is difficult to predict what the Greek elections will bring this weekend and who will be elected to run the unstable country. A temporary Greek government has been in power since May. The choice will be between two opposing parties. On the one hand is a radical leftist party that has no appetite for an international loan agreement which had forced the government to make deep budget cuts. On the other hand, the New Democracy party vows to remain in the Eurozone and alter existing policies so that the Greek people will find relief and be able to move forward with development. Greece is in a dismal state of affairs and the tension is evident. Some people are at the point of suicide. Reuters reported that major Central banks are ready to intervene to keep markets operating smoothly in case of turmoil.
In Egypt, two presidential candidates will be competing for rule of the country. They are Muslim Brotherhood member, Mohamed Morsi and Ahmed Shafiq, a former Air Force General who was also a civil aviation official under Prime Minister Hosni Mubarak. Egypt’s highest court declared the parliament invalid, sending the nation into turmoil. This put the country’s interim military rulers with the legislative authority. Protests had erupted earlier this month in Tahrir Square with news of Shafiq running for office.
Spain is also headed for economic destruction if the nation remains on its current course. Its soaring borrowing costs are creating great concern. Although last weekend the Eurozone agreement finalized lending Madrid up to 100 billion euros ($125 billion) to recapitalize ailing banks, its 10-year bond yield hit a euro lifetime high just over 7%. Moody’s Investor Service has decreased Spain’s sovereign credit rating by 3 notches to Baa3 which is only one level above junk.
Italy has seen its three-year borrowing costs shoot up to 5.3% at auction which is another rising cause for concern.
Back here in the United States, the number of Americans filing for unemployment benefits rose last week. Corporate giant, Nokia, announced that it plans to cut 10,000 more jobs which is a fifth of its workforce and its second quarter loss in the phone unit segment is greater than previously expected. Investors are hoping that the Federal Reserve will signal more easy money in their policy release statement next week to counter sluggish growth in the ailing economy.
PHOTO CREDITS: Getty Images, A/P, Reuters
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