90 seconds at 9am: Perpetual dumps St Laurence into receivership; European contagion fears

Bernard Hickey details the key news overnight in 90 seconds at 9am, including news St Laurence has been put into receivership by Perpetual Trust overnight in a shock move just a day after St Laurence announced it planned to ask investors for a debt-for-equity swap.

Perpetual angrily accused St Laurence of issuing the statement without its approval and trying to maintain control of a company that was insolvent. Since then St Laurence have said it is extremely disappointed by the decision and wants a shareholder meeting to overturn it.

Meanwhile, the oil slick in the Gulf of Mexico worsened overnight forcing US authorities to call in emergency services to contain the spill BP and insurers face losses of over US$1.5 billion. The Exxon Valdez spill in Alaska cost over US$3 billion.

Meanwhile overnight, European governments are scrambling to come up with a bigger rescue package for Greece within days to stop contagion and bolster the euro. Nouriel Roubini, who predicted the crisis, has said the Greek crisis is just the tip of the iceberg. There will be future debt crises and higher interest rates as bond vigilantes increasingly set the agenda on financial markets.

“The thing I worry about is the buildup of sovereign debt,” said Roubini, a former adviser to the U.S. Treasury and IMF consultant, who in August 2006 predicted a “painful” U.S. recession that came to fruition in December 2007.

If the problem isn’t addressed, he said, nations will either fail to meet obligations or see faster inflation as officials “monetize” their debts, or print money to tackle the shortfalls. Roubini, who teaches at NYU’s Stern School of Business, told attendees at the Beverly Hilton hotel that “Greece is just the tip of the iceberg, or the canary in the coal mine for a much broader range of fiscal problems.”