ASSESSMENTS

Latvia: Effects of a Failed Bond Auction

Jun 4, 2009 | 18:05 GMT

MARKKU ULANDER/AFP/Getty Images

Summary

Speculation that the Latvian government could no longer support its peg to the euro caused investors to shun bond auctions on June 3 and 4, which foreshadows a more serious European-wide problem, with budget deficits ballooning across the Continent. And for countries like Latvia, it may be time for another round of lending by the International Monetary Fund.

Unable to sell more than $100 million worth of bonds, the Latvian government has sent an unsettling message to emerging European markets. ...

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