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Markets braced for turmoil after IMF and EU withdraw £17bn Hungary financing deal

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posted on Jul, 18 2010 @ 06:46 PM
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Markets braced for turmoil after IMF and EU withdraw £17bn Hungary financing deal


www.telegraph.co.uk

European equity and credit markets are braced for a volatile day of trading after the IMF and the European Union dramatically withdrew a €20bn (£17bn) financing deal for Hungary over the weekend.

...The move, which was described by economists as “very rare”, means that Hungary will not have access to standby funds that were secured as part of a 2008 loan deal...

...The stark move by the IMF and EU will reignite fears in global stock and money markets about the state of Europe’s sovereign debt.
(visit the link for the full news article)


Related News Links:
www.zerohedge.com

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The "up-to-the-minute Market Data" thread




posted on Jul, 18 2010 @ 06:46 PM
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With public debt running at 80% (!) of GDP Hungary is in real trouble. Now the IMF & the EU have said its austerity measures just aren't serious enough for it to receive the previously promised injection.

As if Europe wasn't in enough trouble already. Now you can add Hungary to the list of teetering economies (Portugal, Italy, Greece & Spain).

The markets are not going to like this sudden unexpected turn of events, that's for sure.


www.telegraph.co.uk
(visit the link for the full news article)



posted on Jul, 18 2010 @ 07:30 PM
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Originally posted by pause4thought
As if Europe wasn't in enough trouble already. Now you can add Hungary to the list of teetering economies (Portugal, Italy, Greece & Spain).

My question is why wasn't Hungary on that list?

I don't know if the markets will react negatively, but I wouldn't.



posted on Jul, 18 2010 @ 07:39 PM
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reply to post by ArMaP
 



My question is why wasn't Hungary on that list?

I see you're in Portugal. I wasn't meaning to be discriminatory. But the countries listed (often referred to as PIGS, for obvious reasons) have been the focus of concern for some considerable time.

You could argue other nations such as Latvia should also be listed. As you know, there have been significant concerns about the UK too, (though the major austerity program under way has relieved the pressure there.)

But this is a major and unexpected blow to Hungary, and the repercussions will only begin to become apparent once the markets have opened...



posted on Jul, 18 2010 @ 07:41 PM
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Originally posted by ArMaP

Originally posted by pause4thought
As if Europe wasn't in enough trouble already. Now you can add Hungary to the list of teetering economies (Portugal, Italy, Greece & Spain).

My question is why wasn't Hungary on that list?

I don't know if the markets will react negatively, but I wouldn't.


Hungary wasn't on the list because while it's Debt to GDP was high, it was still relatively stable.. in fact, it's ratio was lower than the PIGS. The PIGS are highlighted as disastrous because deficit spending per GDP was over 4% .. doesn't really have much to do with total GDP and overall Debt. Ireland for instance has 811% debt to GDP! no I didn't accidentally hit the 1 button to many times.

220% above it's GDP alone was pledged to support Irish banks..

The PIGS are all in the same situation.

Hungary was no different than Latvia, Poland, Lithuania etc.. dirt poor countries with high levels of debt and very little growth. the loans were made out more or less to protect European Banks, which are being dragged down due to property and loan defaults in the Eastern Bloc. Pulling Hungary's assistance is "Rare" because it's basically condemning them to eventual collapse.... without the assistance of Hungary, and a growing debt problem, the EU is saying "we can live without you after all."



posted on Jul, 18 2010 @ 10:07 PM
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Actually things in Greece are starting to turn around slowly.
The budget deficit has almost been halved, a recent government bonds sale went well.
Thing's are actually going better then expected. All the targets set, have not only been met, but exceed so far.

And may I remind people that the "bail out" package has not been received.
It's a stand-by package.



posted on Jul, 18 2010 @ 10:13 PM
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Dow futures fair value are up 22 points as of 11:04 PM. I'm not seeing the turmoil.

The SP500 fair value futures are only up 3 points as of 11:04 PM.

Is this similar to taking away a line of credit that you never used? I wouldn't be happy about it but it wouldn't have much financial impact. Unless it causes bond prices to go up. I'm not sure what impact it will have. US futures aren't showing any problem.



posted on Jul, 18 2010 @ 10:31 PM
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reply to post by pause4thought
 


Friday's dow went out with a bang. Some expect it to drop to 5000, even 1000. I agree. There is no doubt we will soon see deflation followed by high inflation in the next 5 years. Most have moved to the safety of buying Treasuries and gold. They broke below a buck once and will again.

This is not a typical business cycle. I believe we are in the eye of the storm. It will be worse than the predicted double dip recession, some predict all this spending will only lead to a Depression of historic significance.

Thanks for bringing this to my attention. This may well drag stocks lower by morning. It will be interesting to watch. Time to stock up again! I feel my survival insticts picking up.



posted on Jul, 18 2010 @ 10:47 PM
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reply to post by BLV12
 


I think we'll need to wait and see how this rolls over on China and the US in the next couple quarters. I dont expect it to go well.



posted on Jul, 18 2010 @ 11:27 PM
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I don't think we'll have to wait that long to see what China thinks of this. Hang Seng Index down 190 at the time of this post, after recovering some of the losses earlier. Nikkei is closed for a holiday.

I'm calling down 300 on DJIA when US markets open tomorrow.



posted on Jul, 19 2010 @ 09:30 AM
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reply to post by netwarrior
 


Good call. Nothing makes sense these days, though: the Dow was up about half a percent a short time ago. It remains to be seen how things will pan out through the day...


Meanwhile things are not looking so positive in Hungary:


Emerging-market stocks fell for a third day as Hungary failed to gain International Monetary Fund approval for its budget plans and concern deepened global economic growth is faltering.

The MSCI Emerging Markets Index slipped 0.5 percent to 943.92 at 11:21 a.m. in London, Hungary’s BUX Index sliding 2.3 percent, the biggest retreat in more than three weeks. Hungary’s forint depreciated 2 percent to 287.75 against the euro, its biggest fall in six weeks...

Source



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