Eurozone debt crisis

[superfrank]

BTW, I see that the ECB will be holding talks later about buying up Italian debt: http://www.bbc.co.uk/news/world-europe-14434831

IMHO, they are whistling in the wind - Italy might be too big to fail, but it's also too big to rescue (unless you engage in a massive money printing operation, but the consequences of that could be catastrophic).

Jeff

Yep, central banks getting ready to waste more billions trying to buck the market.

Their bonuses should be tied to these decisions, then we might see a slightly different approach...

[Iron]

Robert Peston, BBC business correspondant, just twittered:

"Amazingly tortuous statement from European Central Bank: implies it will be buying Italian and Spanish bonds tmrw, tho with huge reluctance"

George Soros must be wishing he'd postponed his retirement...

Jeff

Yep, central banks getting ready to waste more billions trying to buck the market.

[Iron]

Completely agree. When Brown did the stimulus plan I nearly died. It created jobs by errr creating jobs, it didn't do anything to leave a positive legacy at all, just a burden. I am sure some of it went to the right places but I don't think much did.

The waste by the National Policing Improvement Agency is quite shocking: http://www.taxpayersalliance.com/waste/ ... cards.html

£1,800 on a beehive?!? Why do they need a beehive??? LOL!

Jeff

[Euler]

FTSE Futures pricing in a 200 point drop tomorrow morning.

[Iron]

Piers Morgan twittered the following:

'NY Stock Exchange closes 600+ down and cameras show a load of guys in suits by the bell CLAPPING? The world's going mad.'

It seems President Obama's speech today didn't do much to calm the markets...

Jeff

FTSE Futures pricing in a 200 point drop tomorrow morning.

[superfrank]

German government no longer rules out euro bonds
http://www.reuters.com/article/2011/08/ ... 0T20110814

It looks like Germany might have to go all in on the Euro- madness for them economically, but anything else is politically unacceptable to them it seems (not to their people of course, but they don't really count).

But there's no way the Germans would do this without very tight controls. They would effectively control debt issuance with the EZ - they are not going to let the PIIGS decide what to spend, no way.

The biggest battle might be getting the PIIGS to accept it, as they would be giving fiscal control to the Germans/ECB.

I'd like to be short the Euro, but what with?! It's already crashed against most things (except the £ and $, and they are junk too).

EU Heading for Eurobond Clash Amid German Dread Over Looming Fiscal Union
http://www.bloomberg.com/news/2011-08-1 ... union.html

“No single currency has ever survived without some form of debt mutualization,” said Simon Tilford, chief economist at the London-based Centre for European Reform, a research institute focused on European integration. “There’s an increasing recognition that that is the only way of stabilizing the euro zone.”

[Iron]

How about the Yen or the Swiss franc?

The Japananese and Swiss central banks have recently tried to prop up their respective currencies, but I think the markets are just too big for that to be sustainable (just as Norman Lamont!).

Jeff

I'd like to be short the Euro, but what with?! It's already crashed against most things (except the £ and $, and they are junk too).

[Iron]

Greece forced to tap emergency fund - http://www.telegraph.co.uk/finance/fina ... -fund.html

The Eurozone problems remind me of Wack A Mole - just as you get rid of one problem, another pops up!

Jeff

[Iron]

Market slide continues as euro debt fears resurface - http://www.bbc.co.uk/news/business-14785694

Wednesday should be an interesting day - The German courts will rule whether Germany's bailouts are legal...

Jeff

[Iron]

Channel 4's Faisal Islam tweeted this afternoon:

'If as I have been told, there is no communique from the G-7 on Friday, in these conditions, then the G-Zero has finally arrived. @Nouriel'

I asked him what he meant by Ground Zero, and he replied:

'g zero, global economic governance and international economic relations coordinated by absolutely nobody'

Jeff

[superfrank]

Trichet Loses Cool on Deutsche Mark Question
http://www.bloomberg.com/news/2011-09-0 ... rmany.html

Trichet, 68, today lost his cool with a reporter who asked whether Germany should abandon the euro and return to the mark as Europe’s debt crisis roils markets and spooks voters.

“I would like very much to hear the congratulations for an institution which has delivered price stability in Germany for almost 13 years,” Trichet said in Frankfurt in an uncharacteristically raised voice. “It’s not by chance we have delivered price stability,” he said. “We do our job, it’s not an easy job.”

Actually it was by chance... imported deflation on physical goods from the far east was the only reason headline inflation was low during the credit boom. And it fooled idiots like him, Bernanke and King into thinking that the bubble wouldn't burst.

He's made a fool of himself recently... ruling out further bailouts then being panicked into a U-turn days later as markets called his bluff.

[Euler]

It feels like a Greek default is almost certain any day now. Bonds yielding >50%

[Iron]

Tweet from Zerohedge this morning: Greek 2 Year Bonds pass 60% for first time ever

Those are mafia rates of interest!

You can get a Capital One credit card for people with CCJs with a much lower interest rate that that!

Jeff

[superfrank]

Sooner or later all the little PIIGS are going to default.

Bailouts are just sticking plasters that fall off in the bath.

The only thing that could save the PIIGS is a huge devaluation of the Euro, but that's not possible in an environment of currency wars. The Eurozone is the largest export market of the US (and UK) and the FED and BoE have been pursuing weak $/£ policies since the financial crisis started - the last thing they want is a weak Euro. Even the Swiss have joined in now.

Eurobonds would do it, but that would mean Germany et al accepting complete liability for the PIIGS and I think that's a step too far for them.

Politically the only thing more unpalatable to the Germans, apart from leaving the Euro, is accepting a weak currency.

[Iron]

I was chatting yesterday with a guy who'd recently been on holiday in Greece.

It seems the price of everything (for tourists, at least) is sky high. He had to pay 4 quid just for a glass of water! Maybe things are so desperate that businesses are willing to risk the long-term future of tourism in the country, in order just to stay afloat...

Jeff