When will European debt markets return to normal?
There has definitely been a change in investor confidence over the last few weeks in relation to European debt markets. The unexpected move by the German authorities to suspend short-selling of German sovereign debt caught many by surprise and has potentially opened up old wounds within the EU. But when will European debt markets return to normal?
There is growing concern that we have yet to see the worst of the investor backlash against European sovereign debt. What started as a ripple in the European pond has taken on tidal wave dimensions over the last few weeks. Only last week we saw EU leaders trying to deflect concerns about the Euro by suggesting that the UK pound would come under pressure in the short-term and the UK government would not be able to depend upon EU financial assistance. At this moment in time sterling has remained relatively calm compared to the Euro although it is still very much early days in the life of the new UK government.
The euro has come under pressure primarily because of concerns regarding the finances of the European Union as a whole but there is also a fear that in-fighting could wreck the structure of the EU going forward. Former strong allies France and Germany are known to have been at loggerheads regarding the Greek debt bailout and more and more we are seeing countries acting on their own as with the announcement by the German authorities about a ban on short-selling. Is Europe really united?
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