Strategic Briefing | 3.22.12 | Is The Euro Crisis Over?

Draghi Says Worst of Debt Crisis ‘Is Over,’ Bild Reports
Bloomberg | Mar 21
European Central Bank President Mario Draghi said the worst of the sovereign debt crisis is over, Germany’s Bild newspaper reported, citing an interview. “The worst is over, but there are still risks,” Draghi was quoted as saying. “The situation has stabilized. The important indicators for the euro zone, like inflation, current account and above all the budget deficits, are better than, for example, in the United States.” Investor confidence has returned and “the ball is now with governments,” Draghi said, according to Bild. “They must sustainably secure the euro zone against crises.”

ECB’s Draghi says worst of euro zone crisis over
Reuters | Mar 21
The worst of the euro zone crisis is over and the European Central Bank will act if inflation risks grow, ECB President Mario Draghi said in a German newspaper interview released on Thursday, seeking to ease angst in Germany about price rises. Draghi was quick to add, however, that there was no inflationary threat from twin long-term lending operations the ECB has conducted in recent months which have unleashed more than 1 trillion euros into financial markets.
Merkel: Eurozone crisis not over yet | Mar 22
German Chancellor Angela Merkel on Wednesday (21 March) said the eurozone crisis is “not over” yet, but merely in one of its “various phases,” even as investor confidence seems to be returning to troubled euro-countries. “Concerning the development of the crisis, we cannot say today that it is over, we still find ourselves in one of the various phases of the crisis,” she told a meeting organised by her Christian Democrat parliamentary group.
U.S. Notes Europe’s Progress in Easing Its Debt Crisis
The New York Times | Mar 21
For the United States, the looming threat from the long-simmering European sovereign debt crisis seems finally to have started to subside. European leaders did not combat the crisis with the force American policy makers had urged. But a Continent-wide agreement to slash deficits and lifelines tossed to European banks have helped reduce borrowing costs, and Washington now seems to be breathing a tentative sigh of relief.
Is the worst of the euro crisis over?
Global Post | Mar 21
Maybe. But several pitfalls still lie ahead. (We’re looking at you, Portugal.)…. The immediate risk of catastrophe has receded, but the euro zone is far from finding its way out of the woods — and the big bad wolf of currency collapse is still lurking among the trees. Portugal might still be forced into a Greek-style default. Greece could still backslide after its impending elections. The frontrunner in France’s presidential election wants to pick apart new rules on fiscal discipline. Soaring oil prices may still drag the euro zone recession down to unsustainable levels, and southern Europe’s inability to generate growth could vanquish all efforts to stem those countries’ rising debt.
Greece’s new bonds: Is another default coming?
Jacob Funk Kirkegaard (VOX) | Mar 21
Last week’s historical restructuring of Greek debt appears to have gone smoothly. This column argues that appearances may be deceptive…. The new concern is Greece’s new long-term bonds that were thrust upon the country’s hapless private creditors in last week’s coercive bond swap. They have begun trading at north of 20% yields. In what is probably an illiquid market, these yields suggest that markets expect a second Greek default against private creditors.