Dec. 28 - After a year of extreme swings, global financial markets look set for another challenging year says senior financial analyst Louise Cooper from BGC Partners. Hayley Platt reports.
It's been an exhausting year for Europe's analysts - full of market swings and volatility. No doubt many will be glad to see the back of 2011. Louise Cooper is a senior financial analyst with BGC Partners. SOUNDBITE: Louise cooper, senior financial analyst, BGC Partners, saying: (English) "Greek riots rather strangely has been quite a big series of moments for me because it reminds us all that we're all democracies and politicians can only impose or do what their electorates want them to do." Greece was the focus of attention for the first half of 2011. But as its government pressed on with a series of austerity measures the markets remained unconvinced. And countries holding Greek government bonds were in for a shock. SOUNDBITE: Louise cooper, senior financial analyst, BGC Partners, saying: (English) "You can see quite dramatically that the cost of insuring Greek debt has shot through the stratosphere. It cost about 700 basis points at the beginning of this year, it's about 12,000. That's a seventeen fold increase in the cost of insuring Greek debt and this kind of level it's telling you pretty much Greece is going to default." In August it was America not Europe which sent shares tumbling - it lost its prized triple A credit rating. It too was battling with huge debts and many feared it was heading back into recession. The S&P 500 lost more then 10 percent of its value - its biggest losses in almost three years. But it was fears of contagion in the euro zone which re-focused investors. Italy's massive deficit - 120 percent of gdp - became the big worry - with the euro zone's third largest economy deemed too big to fail. The then prime minister Silvio Berlusconi faced a vote of confidence. SOUNDBITE: Louise Cooper, senior strategist, BCG Partners, saying (English): "As his government supposedly tried to implement austerity and completely failed to do so you can see Italian borrowing yields just go up and up and up. So go from a 5% level all the way up to almost 7.5%." A new technocrat government is now trying to impose austerity in Italy but it and Spain's borrowing costs continue to creep up. SOUNDBITE: Louise Cooper, senior strategist, BCG Partners, saying (English): "I would love to think that 2012 will be better but I actually feel it will be worse. I think come the beginning of the year minds will be focussed on quite how much debt some of these governments in Europe need to issue just to survive, hundreds of billions of euro." Rumours that France may be next to lose its triple A credit rating are now circulating. Louise and many other analysts fear 2012 could make 2011 look like the good old days. Hayley Platt, Reuters.