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Denmark joins the list of problem European economies

Denmark is usually regarded as a safe haven due to its low debt to GDP ratio of 44%. Jes Asmussen, chief economist at Svenska Handelsbanken AB in Copenhagen, said in an interview. Denmark “has been in a recession already and I think we’re going to be there again. It seems pretty clear that the outlook is quite dire.”(courtesy: Bloomberg)

With housing prices due to decline a further 10% in '12, reaching a decline of 25% since the housing peak in 2007,  and with unemployment rising, the budget deficit is expected to rise to 4.5% of GDP while its Scandanavian neighbors, Sweden and Norway are generating surpluses.  Not surprisingly, Danish GDP declined half a percent in the most recent quarter and looks set to decline again slightly in Q4.  Bond yields?  They remain at a bullish 2% and Denmark maintains a current account surplus thanks to its safe haven status.  But for how long?  Bond investors rushing into Danish bonds may find it to be an unpleasant trip.

(source: Bloomberg)