Professional Documents
Culture Documents
• The US faces one of the steepest budget crunches in the world; over the next few years,
governments around the world will have to cut $4T from their budgets; the US has one of the steepest
reductions of all to make. Under the current projections, the US debt‐to‐GDP will climb to >100% by ’15,
a far steeper increase than is being forecast in many other countries. The US has one of the lowest
average maturities in the world also. London Telegraph
US General Gov. Net Debt as % of GDP
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
F 2010
F 2012
F 2014
This is ‘net’ debt, they are citing ‘gross’ debt above. 2010 to 2014 are forecasts – Source: Bloomberg, IMF
• Europe ‐ Hurting sentiment are comments from Germany’s Merkel that the bailout announcement
"has only bought time, not a solution" and comments from European Commissioner for Economic and
Monetary Affairs Olli Rehn that the €750 billion (£638 billion) crisis mechanism agreed last week should
be made so unattractive that countries will not want to use it.
• Trichet blames the state of Europe’s fiscal condition, not speculators, for the euro’s recent slump;
Trichet said Europe could be heading for its toughest situation for the last 65 years; Trichet reiterated
that his bank remains independent from political influence and called for a “quantum leap” in
supervision of individual state spending; Trichet said the situation last weekend was similar to what
occurred after Lehman w/world capital markets seizing up – Spiegel
• Euro – do European officials secretly welcome the weaker euro? ECB’s Nowotny says not worried
about euro slide ‐ the euro's slide against the dollar hasn't raised "major concerns" at the European
Central Bank he said; also on the euro this morning – the EU Commission said the weaker euro “is
helpful” for European exports”. Russia cut the euros shares in its foreign currency reserve, and a report
this weekend from UBS suggests that the appetite for holding euros among private sector institutions
and managers of official currency reserves is fading • Levels of short bets against Euro at record levels
‐ Net speculative bets–called shorts–against the euro increased to $18 billion in the week ended
Tuesday (WSJ) – Short Euro has been THE trade of late.
EURUSD cross rate
• Hedge Funds – some of the world’s largest hedge funds are suffering losses in May as a result of the
market volatility; losses in May have erased the YTD gains for a bunch of managers (FT)