The beleaguered nations of Europe created a program called EFSF (European Financial Stability Facility) to help sovereign debt issuers and Euro Zone banks cope with the ratings agency cuts to their debt ratings and rising interest rates. But yesterday, the S&P downgraded the EFSF itself.
Yesterday, investors began dumping bonds, even in stronger economies like Austria and Finland. The sell-off shows a need for bolder solutions to the European debt crisis, say some.
Stock markets in the US and Europe fell Tuesday, stunned by news that Greeks will vote in January on national austerity measures tied to resolving Greece's sovereign debt woes.
As developed economies deal with debt and emerging economies like China ramp up, the G20 must spearhead coordinated, complementary policies to navigate the choppy waters ahead, especially for Europe. Austerity alone won't do the trick.
Although China, the world's largest creditor, has bought European bonds in the past, experts doubts that it will invest in a new investment vehicle meant to alleviate the Europe debt crisis.