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By Pat Dorsey, CFA | 05-21-2010 09:57 AM

Clarity on the Europe Crisis

Morningstar's Pat Dorsey, Matt Warren, and David Sekera trace the potential global domino effects and uncertainties surrounding Europe's debt woes and bailout plan.

Pat Dorsey: Hi, I'm Pat Dorsey, director of equity research at Morningstar.

With the credit crisis in Europe surrounding Greek's potential inability to pay its debts roiling U.S. and global markets, I thought it would be worthwhile getting some intelligent voices in on the discussion. I'm happy to have with me today the associate director for our banking team, Matt Warren, and securities analyst David Sekera, who has a lot of experience on the fixed-income side of things, to maybe help us put some context into what's been going on in Europe and how it might affect things here in the U.S. and globally.

Thanks for joining me, guys.

Matt Warren: Good to be here.

Dorsey: So big picture, a couple of weeks ago the European authorities announced a trillion-dollar shock-and-awe rescue package that had pretty much every securities market jumping up three, 3%-4% on Monday morning. A trillion bucks is a lot of money but doesn't seem to have been enough. Why is that?

David Sekera: As we've seen at the end of 2008 and beginning of 2009, the fixed-income markets seem to try and test the policymakers' resolve. And they want to make sure that it's really going to be there at the end of the day. Still needs to get passed through the different parliaments over in Europe. And we want to to see exactly how this mechanism is going to work at the end of the day.

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