By Dave Kansas
As mentioned in a previous post, the so-called euro-zone peripherals are about the only noise in the market right now. My Dow Jones colleague Riva Froymovich notes that even those not considered peripheral are nervous.
She writes:
Belgium runs the risk of an attack by financial market speculators if the government doesn’t? decide on budget measures in the first quarter of 2011, Finance Minister Didier Reynders said in an interview Tuesday.
Belgium has had a caretaker government since elections in mid-June, with coalition talks stymied by a dispute between the French-speaking and Dutch-speaking regions over social security.
Meanwhile, Belgium’s borrowing costs have risen as global markets remain focused on high sovereign debt levels across the euro zone. And the cost of insuring Belgium government debt is now sitting near record highs in the credit default swap market.
“I am sure that speculators will attack Belgium if…at the beginning of the year, in the first quarter of the next year, decisions are not taken either by the new government or by the current government,” Mr. Reynders said in an interview with television channel RTL-TVi.
Earlier in December, Standard and Poor’s Corp. lowered its ratings outlook on Belgium to negative from stable, saying if the country fails to form a government within six months it could possibly face a one-notch downgrade.
S&P said the current caretaker government may not be able to deal with a large shock to its public finances, which are currently at a “high level” of 94.6% of gross domestic product.
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