European Debt Crisis in Figures- MercBelize, Commodity ExchangeEuropean Union or so called EU comprises of 27 countries wi...
Bond Yield is the initial indicator which points that an economy is in a good shape or not. 10 Year Bondyields of Greece, ...
From the above table, you see how worse the GDP situation of Greece, Portugal, Italy and Spain is. GDPis the Gross Domesti...
5. UnemploymentThe above debt levels has caused unemployment to rise at ever high levels for these Eurozone countriesas ne...
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European Debt Crisis in Figures- MercBelize, Commodity Exchange

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About MercBelize
MercBelize is an 100% online exchange committed to provide a world-class mercantile exchange domiciled in Belize, licensed by International Financial Services Commission of Belize. CFD and Spot trading is being promoted by MercBelize to our extensive client base across the globe. We provide global exchange trading system with highly automated trading platforms including best charting tools available in the industry having multiple Trader workstations where traders can handle multiple accounts from a single platform anywhere in the world.
http://www.mercbelize.com/

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European Debt Crisis in Figures- MercBelize, Commodity Exchange

  1. 1. European Debt Crisis in Figures- MercBelize, Commodity ExchangeEuropean Union or so called EU comprises of 27 countries with all members having equal rights exceptfor voting powers for certain countries in the Union according to their population size. Having only 7% ofWorld’s population, EU trades accounts for 20% of global exports and imports and is the world’s biggestexporter and second biggest importer. It’s GDP data accounts more than that of US and China combinedtogether. Unemployment has raised much for EU after the recent economic and financial crisis and isnow having an average of 7.5% as per the latest data by EU.EU Members with Year of Entry into the European Unionis given below based on the date of joining theEuropean Union.(Country and Joining Year respectively)Belgium-1952France-1952Germany-1952Luxembour-1952Netherlands-1952Denmark-1973Ireland-1973UnitedKingdom-1973Greece-1981Portugal-1986Spain-1986Austria-1995Finland-1995Sweden-1995Cyprus-2004ChechRepublic-2004Estonia-2004Hungary-2004Latvia-2004Lithuania-2004Malta-2004Poland-2004Slovakia-2004Slovenia-2004Bulgaria-2007Romania-2007(Source: europa.eu)Debt Crisis in Figures 1. 10 Year Bonds
  2. 2. Bond Yield is the initial indicator which points that an economy is in a good shape or not. 10 Year Bondyields of Greece, Portugal, Spain and Italy are still at higher levels without changing much after rescuepackages and stimulus measures from European Central Bank, IMF and ESMF within last one year. Fromthe below table, it can be seen that Greece, Portugal, Spain and Italy are still facing hurdles in Bondmarket due to high yields for 10 year bonds primarily on low demand from market participants. Thesehigh yields suggests lack of demand on uncertainty surrounding European Union with investors notwilling to buy bonds in the midst of stimulus packages announced so far.(Country, Year and Change respectively)Greece, 19.93%, -0.62Portugal, 8.58%, -0.02Spain, 5.76%, -0.01Italy, 5.05%, +0.06France, 2.28%, 0.00Netherlands, 1.87%, +0.01UK, 1.83%, +0.04Germany, 1.60%, +0.02(source: bloomberg.com)Yield is inversely proportional to Bond prices, as rise in Prices cause low yields and vice versa.(Bond-Yield = Coupon Rate of a Bond / Current Market price of the Bond). Since Coupon rate is constantand Price of the bond is the only variable factor in calculation of Bond-Yield.Rise in yield moves according to a country’s financial strength. Investors want to have higher rate ofreturn for their investments and hence reliability on returns from these EU countries is a matter ofconcern for most of institutional investors. This reliability will come only when GDP of a nation is in abetter condition. Let’s take a look on GDP situation of these EU countries. 2. GDP ChangeGDP of Greece, Portugal, Italy and Ireland are still in the negative territory for the last one year andhence these countries’ debt repayment makes harder for investors to believe in the current marketcondition. Following GDP table for these EU countries will give a clear picture.(Country and %YoY respectively)Greece, -6.3%Portugal,-3.3%Italy,-2.6%Spain,-1.3%Ireland, -1.1%UK,-0.5%Netherlands,-0.5%Belgium,-0.3%France,0.3%Germany,1.0%(source: bloomberg.com)
  3. 3. From the above table, you see how worse the GDP situation of Greece, Portugal, Italy and Spain is. GDPis the Gross Domestic Product of a country which is the net sum of all goods and services produced froma country. A minus GDP figure points that revenue of a country has fallen significantly or expenditurehas risen heavily. To confirm whether GDP has caused due to rise in expenditure or fall in revenue, weshall check the debt levels as a percentage of GDP for these countries. 3. Debt LevelsDebt level as a percentage of GDP for worst affected EU countries makes it clear that much expenditurewithout proper return on investment was the prime cause of failure for these countries and it has beenoccurring for several years at much higher levels. The more a country’s debt level to its GDP, the lesserwill be for investment thereby stagnating growth further. Below table gives a clear picture of Debt as apercentage of GDP as of Dec 2011.(Country, %Last and %Year Ago respectively)Greece, 165.3%,145.0%Italy,120.1%,118.6%Ireland,108.2%, 92.5%Portugal,107.8%,93.3%Belgium,98.0%,96.0%France, 85.8%,82.3%UK,85.7%,79.6%Germany,81.2%,83.0%Spain,68.5%.61.2%Netherlands,65.2%,62.9%(source: bloomberg.com) 4. Budget BalanceEU countries in the recession zone are having negative budget balance indicating high budget deficit forthese governments. This indicates how much a government has to borrow for running the country andthe more it borrows its debt to GDP levels will also increase. Following table (as of June 2012) showshow intense is the situation in Ireland, Greece and Spain to run their governments on a daily basis.(Country, %Last and % Year Ago respectively)Ireland,-13.1%,-31.2%Greece, -9.1%,-10.3%Spain,-8.5%,-9.3%UK,-8.3%,-10.2%France,-5.2%,-7.1%Netherlands,-4.7%,-5.1%Portugal,-4.2%,-9.8%Italy,-3.9%,-4.6%Belgium,-3.7%,-3.8%Germany,-1.0%,-4.3%(source: bloomberg.com)
  4. 4. 5. UnemploymentThe above debt levels has caused unemployment to rise at ever high levels for these Eurozone countriesas never as ever before and is now at 25% for Spain, Greece at 24.4%, Portugal at 15.7%, ireland at14.9% and Italy and France above 10% levels. This higher unemployment can significantly lowergovernment revenues if the government is not able to control budget deficit. However, governments inthese EU countries may take much time to solve the debt crisis due to the high degree of economicslowdown.(Country, % Last and Date respectively)Spain, 25.1%, Jul 31Greece, 24.4%, Jun 30Portugal, 15.7%, Jul 31Ireland, 14.9%, Jul 31Italy, 10.7%, Jul 31France, 10.3%, Jul 31UK, 8.1%, Jun 30Belgium, 7.2%, Jul 31Germany, 5.5%, Jul 31Netherlands, 5.3%, Aug 31(source: bloomberg.com)About MercBelizeMercBelize is an 100% online exchange committed to provide a world-class mercantile exchangedomiciled in Belize, licensed by International Financial Services Commission of Belize. CFD and Spottrading is being promoted by MercBelize to our extensive client base across the globe. We provide globalexchange trading system with highly automated trading platforms including best charting tools available inthe industry having multiple Trader workstations where traders can handle multiple accounts from a singleplatform anywhere in the world.http://www.mercbelize.com/

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