Financial Times (December 17)
With preliminary agreement on a permanent crisis mechanism, the EU has finally moved “to avoid future crises.” The permanent mechanism is not quite a done deal. The pact would take effect in 2013, following approval by EU leaders in March and then by the EU’s 27 member states. In the meantime, however, market concern remains centered on the ability of EU states and banks to attain adequate debt financing, a potentially explosive issue the EU has continued to dodge. The Financial Times believes these immediate concerns must now be addressed. “Europe will only be able to enjoy tomorrow if it first deals with the problems of today.”
Tags: Banks, Crisis mechanism, Debt, EU
Washington Post (November 26)
Sheila Bair fears the next big crisis will start in Washington. The “explosive growth in federal borrowing” is the cause of the FDIC Chairman’s fears. “Federal debt has doubled in the past seven years, to almost $14 trillion” or 62% of GDP. That means each American household shoulders over $100,000 in federal debt. Bair says the deficit needs to be cut before the U.S. wakes up to a new crisis.
Boston Globe (September 28)
Harvard is still reeling from the recession. When its endowment plunged in value, the university doubled its debt load to fund operations. Harvard’s debt soared to $6 billion over the past 3 years. According to the Globe, “Harvard is maxed out on debt for the foreseeable future. In order for the university to keep its AAA bond rating, its usual way of financing buildings, borrowing from investors, is effectively off the table.” Projects, such as the $1.4 billion Allston science facility project, are now being halted as Harvard look for ways to cut costs.
