Tags: BlackRock | Fink | Liquidity | Europe

BlackRock’s Fink: ‘Liquidity Vanishing in Europe’

By Dan Weil   |   Wednesday, 16 Nov 2011 08:38 AM

While financial markets in the United States have calmed down since Greece and Italy changed their governments, Europe’s debt crisis continues to rage, says Lawrence Fink, CEO of BlackRock, the world’s biggest money manager.

“Today, the problem is not Italy, and everyone’s focused on Italy,” he tells CNBC. “The problem today is all the triple-A credits in Europe other than Germany.”

And that includes France. French bond yields carried a premium of only 10 to 20 basis points over German bonds at the height of the financial crisis in 2009, Fink says. But now that spread has exploded to 185 basis points. (One basis point is equivalent to 0.01 percent, or one-hundredth of a percentage point.)

“The market place is saying this isn’t just an Italian problem, this is becoming a European problem,” Fink says. “Liquidity is vanishing in Europe.”

Time is of the essence for Europe to right itself, he says. “If there’s not a solution in the next few weeks it’s going to become too big.”

Italy and Spain have hundreds of billions of dollars in financing needs over the next year that they may not be able to cover, Fink says.

Others agree that the situation remains dangerous, notwithstanding the technocrats who now head Italy and Greece.

“There’s a deep flaw in the structure of the common currency and that’s not something that technocratic governments can do anything about,” Philip Whyte, a senior research fellow at the Centre for European Reform, tells Bloomberg.

“Monetary union without fiscal and political union is inherently unstable.”

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While financial markets in the United States have calmed down since Greece and Italy changed their governments, Europe s debt crisis continues to rage, says Lawrence Fink, CEO of BlackRock, the world s biggest money manager. Today, the problem is not Italy, and everyone s...
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