Thursday, 24 November 2011

Happy Thanksgiving

Thanksgiving Day is a holiday celebrated in the US on the fourth Thursday in November. Despite their own difficulties in dealing with budget deficits - most notably the recent failure of the Super Committee to break down the partisan barriers between Democrats and Republicans and agree on a path forward - I should imagine that our North American cousins are giving thanks to their ancestors for leaving the Old Country behind.

Today has been another very poor day for European bond markets, with Italian 10 year bond yields once again breaching the symbolically important 7% level. As importantly, today has also seen Irish bonds jump by almost 1% to 9.35% and Portuguese bonds by over 0.8% to 11.4%. Even Germany found itself unable to borrow yesterday as bids were received for only 60% of its latest issue. Despite fierce opposition from Angela Merkel, the pressure mounting on the European Central Bank is increasing by the day. Angela Merkel and Nicolas Sarkozy have pledged to push ahead with fiscal reform and greater union, but it remains to be seen whether they will be afforded the time to get through the tortuous process of treaty renegotiation required.

If things carry on like this, Belgium may even be forced to install a new government. If you weren’t aware - and there is no reason why you should be, as the Belgium seldom makes it into the news - they have been unable to agree on a government since the middle of 2010. The less charitable might say that this is symbolic of Europe as a whole.

Happy thanksgiving!

ROB BURGEMAN

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