Eurozone debt crisis

[Iron]

Thanks Antonio

TBH, I'm not sure that the people who made the calamitous decisions were all merely incompetent buffoons!

I'm sure there were bankers who knew the risks they were taking, but didn't care as long as they were making money!

But I think a lot of them were guys who didn't really know anything about the instruments they were trading, because they didn't have to (just as we don't need to know anything about the horses we trade).

Jeff

Hi Jeff, maybe you should give inside job a go?

[superfrank]

Hi Jeff, maybe you should give inside job a go?

http://www.youtube.com/watch?v=FzrBurlJUNk

[Iron]

Italy government borrowing rates hit euro-era high - http://www.bbc.co.uk/news/business-15617132

Given that Italy is one of the world's ten biggest economies, you'd have thought this might trouble the markets.

Yet bizarrely EUR/USD and the FTSE 100 are drifting!

Jeff

[CaerMyrddin]

Very disturbing if it hits Italy like it did to the other countries...

It's been rumoured Berlusconi might leave the government?

[Iron]

I suspect that's why the markets are rising.

But they should be careful what they wish for!

Maybe the markets are anticipating that Berlusconi's replacement will be a technocrat approved by Berlin.

But whether someone like that would be acceptable to the Italian people is questionable. Similarly, with Greece, I don't know how long Papandreou's replacement will last...

Jeff

It's been rumoured Berlusconi might leave the government?

[Iron]

Barclays Says Italy Is Finished: "Mathematically Beyond Point Of No Return"

http://www.zerohedge.com/news/barclays- ... -no-return

[Iron]

Rather worrying tweet from Robert Peston:

Italian 10-year bond yield breaches 7% threshold. Bailout almost inevitable - but eurozone's bailout fund too small

So Italy can't carry on borrowing at the current unsustainable rate.

They are too big to bail out.

If Italy defaults, the problems we've had over the past few years will seem like a cakewalk!

I hope my gloomy prognosis is wrong, but I can't see things getting any better before they get a whole lot worse...

Jeff

[CaerMyrddin]

The 7% threshold is really important and I think it will be a no return point, as it was to Greece, Ireland and Portugal.

Now it's a look at the mirror moment. Any big economy will be vulnerable and the EU really needs to start printing money asap to offset the debts.

[Iron]

Hi Antonio

I'm not a fan of printing money, but in this case it may be the least bad option, if the alternative is for one of the world's top 10 economies to default.

BTW, it's interesting that the Greeks haven't yet appointed a new PM. I wonder if they're stalling for time whilst they observe what's happening in Italy...

I agree about it being time to look in the mirror. Hard questions need to be answered, and sooner rather than later...

Jeff

Now it's a look at the mirror moment. Any big economy will be vulnerable and the EU really needs to start printing money asap to offset the debts.

[superfrank]

The ECB were always going to have to print sooner or later.

It's a race to the bottom between the UK, US and EZ... the UK is currently 'winning' as we have the most trashed currency and highest inflation in the developed world. The US is 2nd and the EZ (to give them credit they didn't want to go down this road to hell) is a distant 3rd. When they catch up it will make things difficult for the UK and US because the exchange rate advantage with the biggest trading block in the world will have gone. And what then? print even more? It's all madness and will end in tears and an even greater bust.

[Iron]

Tweet by Robert Peston:

'The Italian one-year bill now yielding 8.15%. Hell and handcarts come to mind.'



I seriously wonder whether we're quickly heading for a new global economic paradigm - a socialist revolution, perhaps...

Jeff

[superfrank]

I seriously wonder whether we're quickly heading for a new global economic paradigm - a socialist revolution, perhaps...

We had one of those under Brown... 'didn't work!

[Iron]

We had one of those under Brown... 'didn't work!

Try telling that to the Occupy brigade!

As for as they are concerned, our economic woes lie at the door of the greedy capitalists who produced wealth that's unprecedented in human history...

And something has to give sooner or later. It's not a case of if a top 10 world economy defaults; it's a question of when... You can't go on printing money forever. The ECB might be able to print a trillion and a half euros to save Italy, but what happens when Spain or even France needs a bailout? More money printing? It can't go on forever...

Jeff

[superfrank]

As for as they are concerned, our economic woes lie at the door of the greedy capitalists who produced wealth that's unprecedented in human history...

No they didn't (maybe up until the 90s they did but then it just turned into greed). The recent stuff was just phoney wealth created by excess credit and asset price inflation which the market is currently trying to destroy (quite rightly) but isn't being allowed to because of reflation policies.

[Iron]

If you look at the growth in GDP in real terms since the 60s, it's a very steep curve (at least till a couple of years ago). See http://en.wikipedia.org/wiki/File:GDP_p ... Europe.PNG

The increase in wealth can be seen where I live - Morecambe. In the 60s, tourists flocked here in their millions, as they couldn't afford to have their holidays abroad. It was a happening place - even the Beatles played here. These days, it's pretty dead, even in the middle of the summer...

OK, some of that GDP growth will be fuelled by credit, but much of it is driven by technological advances IMHO.

Jeff

As for as they are concerned, our economic woes lie at the door of the greedy capitalists who produced wealth that's unprecedented in human history...

No they didn't. It was just phoney wealth created by excess credit