Morgan Stanley on European Credit Contagion

Some highlights from Morgan Stanley. For full details see the document below.
  • Final step towards bilateral loans and IMF stand-by agreement taken
  • The aid package limits the near-term liquidity risk and buys more time
  • But the long-term issue of debt sustainability (i.e., solvency) remains
  • Debt restructuring unlikely in the near term, but possible longer term
  • Financial market reaction to the package will determine whether it works
  • Key factors are additional austerity measures the IMF/EU are asking for
  • Near-term event risk: last political or legal hurdles
  • Contagion: Focus back on other peripheral countries (Portugal, Spain)
  • Portugal may be too small to matter; Spain would raise capacity issues.
  • Periphery needs to act now, in our view, and propose additional austerity measures
Contagion Call Slides


Popular posts from this blog

October retail sales come in strong, especially auto sales

Tea Party Buffalo Pictures

How to spot a fake Tea Partier