The fat italian lady is singing

[TomW]

Debt crisis: live
Italian bonds rise past 'unsustainable' 7pc barrier and the country enters bail-out territory, with the ECB reportedly buying country's debt and IMF chief warning that the global economy faces the risk of a 'lost decade'.

http://www.telegraph.co.uk/finance/financialcrisis/8846201/Debt-crisis-live.html

 

[Aaron_C]

Debt crisis: live
Italian bonds rise past 'unsustainable' 7pc barrier and the country enters bail-out territory, with the ECB reportedly buying country's debt and IMF chief warning that the global economy faces the risk of a 'lost decade'.

http://www.telegraph.co.uk/finance/financialcrisis/8846201/Debt-crisis-live.html

Good that means I can buy my Italian tiles and Italian marble cheap. Just in time for me

 

[mattnz]

Great post thanks Tom, it appears that the next crisis wave is on us and short of a miracle the RBA will cut in Dec. The only question remaining is, -0.25%, -0.5% or more?

 

[mattnz]

Just placed a bet at betfair on a greater than 0.5% rate cut in Dec. Got 100:1 odds If this is the crisis it appears to be, this long-shot bet could actually pay off.

 

[mattnz]

Good that means I can buy my Italian tiles and Italian marble cheap. Just in time for me

Just hope it gets delivered.

 

[Seabreeze]

Just placed a bet at betfair on a greater than 0.5% rate cut in Dec. Got 100:1 odds If this is the crisis it appears to be, this long-shot bet could actually pay off.

Actually, those odds look quite attractive.... given how far and fast we dropped last time the excrement hit the rotating machine.

 

[BV]

Debt crisis: live
Italian bonds rise past 'unsustainable' 7pc barrier and the country enters bail-out territory, with the ECB reportedly buying country's debt and IMF chief warning that the global economy faces the risk of a 'lost decade'.

Its crazy, I'm amazed that they've let things get this bad.

http://blogs.telegraph.co.uk/financ...and-china-must-crush-germany-into-submission/

Merkel and Sarkozy need to fix the problem ASAP or all of their partner's money will be going to pay interest, their deficit will grow etc.

This situation will also affect France and Germany because when you take money out of an economy, People who previously were buying German and French goods will only be buying the basics and cars and other German and French toys won't be on their shopping list.....

 

[Indifference]

....

Merkel and Sarkozy need to fix the problem ASAP or all of their partner's money will be going to pay interest, their deficit will grow etc.

....

That's the problem..... it is unfixable by them..... It will take a concerted effort by the entire EU, US, China, IMF and others to even attempt to "fix" the problem BUT that is IMPOSSIBLE because many of the individual economies or institutions themselves, are in the depths of terminal illness...

This is not fiction. Example:

1. Public Sector share of economy in the US was ~12% pre-1930s .... today it stands at ~51% ....unsustainable. It is also at the worst levels by a fair margin since 1942.... think about that for second....

2. When Social Security was established in the US by Roosevelt in 1935, there were ~42 taxpayers per recipient...... today there are only ~3.5 <-- that is a decimal point! ....that is 1/12 what it was...

3. The US Fed/Treasury money supply (the world Reserve Currency!) has more than tripled since 2008... that is more than 3 times the money that existed EVER in US history...in just 3 short years... think about that! Don't believe me? Then look at this:

4. If the US CEASED deficit spending immediately AND paid off their debt at a rate of $100 Million per day ($100,000,000 /day) it would take over 400 years to pay down the EXISTING debt!

I could go on for a very long time with this.....Remember, those examples are from the largest global economy and the nation that currently holds the world's ONLY reserve currency. The US economy has effectively been "hollowed out" but most are too naive to see it. The EU is NO different.... they have hollowed out their collective economies through fractional reserve banking, greed (sustained deficit spending), extremely poor fiscal policy and debasing currency (effectively, printing money).

It is not rational to believe that France & Germany can save the EU.... the collective effort and magnitude of change required to achieve this is almost beyond comprehension.... The shear scale of the problem is so large than scientific notation is required to mathematically represent it... just think about that for a second in comparison to the size of the GDPs in question..... too many zeros exist in the debt column...

 

[BV]

That's the problem..... it is unfixable by them..... It will take a concerted effort by the entire EU, US, China, IMF and others to even attempt to "fix" the problem

The ECB could fix it but Germany has to agree and this is the problem

 

[Indifference]

The ECB could fix it but Germany has to agree and this is the problem

The ECB????

The ECB has just over 5 Billion Euros in capital.... Italy is 2 TRILLION Euros in DEBT..... do you even realize how many extra zeros the ECB needs JUST TO SAVE ITALY???

OMG, you are either being sarcastic or really have no comprehension of the problem..... I really hope it is the former.... I really do....

 

[Aaron_C]

The ECB????

The ECB has just over 5 Billion Euros in capital.... Italy is 2 TRILLION Euros in DEBT..... do you even realize how many extra zeros the ECB needs JUST TO SAVE ITALY???

OMG, you are either being sarcastic or really have no comprehension of the problem..... I really hope it is the former.... I really do....

So....who's holding all those Italian bonds exactly? For every $1 of debt created there has to be $1 of assets held by someone.

 

[Indifference]

So....who's holding all those Italian bonds exactly? For every $1 of debt created there has to be $1 of assets held by someone.

Is this another joke????

You do understand the concept of fractional reserve banking, surely..... No, you do NOT need to hold $1 of assets for every $1 of debt IF YOU ARE A CENTRAL BANK.... that is the rules for the minions... us....

I really hope you are joking...... if not, you have ALOT of catching up to do in order to even have a rudimentary understanding of global currency system.

 

[evand]

Did they have a price for the commodities boom holding Australia up? I'd say it'd be less than 100 to 1.

Just placed a bet at betfair on a greater than 0.5% rate cut in Dec. Got 100:1 odds If this is the crisis it appears to be, this long-shot bet could actually pay off.

 

[BV]

The ECB????

The ECB has just over 5 Billion Euros in capital.... Italy is 2 TRILLION Euros in DEBT..... do you even realize how many extra zeros the ECB needs JUST TO SAVE ITALY???

OMG, you are either being sarcastic or really have no comprehension of the problem..... I really hope it is the former.... I really do....

OMG???
The ECB is the European equivalent of the Fed Reserve so in theory it has unlimited funds but its hands are currently tied up.

In recent times they've been intervening in the markets and buying bonds but it isn't enough. An ECB with its powers changed could function like the federal reserve and save Europe

 

[Indifference]

OMG???
The ECB is the European equivalent of the Fed Reserve so in theory it has unlimited funds but its hands are currently tied up.

In recent times they've been intervening in the markets and buying bonds but it isn't enough. An ECB with its powers changed could function like the federal reserve and save Europe

OK, BV... you really need to read my previous post #8....

To be quite honest, I believe you need to greatly improve your knowledge & understanding before further comment.

The ECB asset base is comprised of EU members contributions.... Italy is the 3rd largest economy of the EU & is 2 TRILLION in debt & on the verge of falling off an economic cliff.... Where exactly is the ECB going to pull all this capital from???

And before you start on about the US Fed, just pause for a second and re-read (or read for the first time....) post #8..... then consider that China owns ~3 Trillion of THAT debt ( the US debt) & has already said NO to bailing out the EU..... So who on earth.... on the entire PLANET, has the capital to give to the ECB in order that they can "save Europe"....

I am laughing so hard right now it hurts... no really I am.... Have a look at that chart I posted.... that is about all the ECB could do if they were given the mandate to print currency (which they do NOT currently have) and think about where that will lead the EU..... Creating more currency or playing a giant debt shell game is NOT a solution... it is simply kicking the can down the road towards the inevitable......

That is precisely how the current economic crisis was created.... so you suggest more of the same....

 

[BV]

you need to greatly improve your knowledge & understanding before further comment.

???
Perhaps you would benefit from doing some reading yourself

Where exactly is the ECB going to pull all this capital from???

Maybe they have to get those printing presses going 24/7 like the Americans do.

That is precisely how the current economic crisis was created.... so you suggest more of the same....

The western world is drowing in debt and without trying to blame those who started this crisis, the only way out of it is by printing money.
Or do you know a better way?

 

[shuggy]

Just placed a bet at betfair on a greater than 0.5% rate cut in Dec. Got 100:1 odds

have you got a link? ... i couldn't find it

 

[cloudyday]

Indifference, you are talking to a crowd of people who just understand 1 thing and that's buying property... It's always funny to see people who have no clue about a topic jumping in and attempting to make out they are experts though. It happens all the time, everywhere.

So....who's holding all those Italian bonds exactly? For every $1 of debt created there has to be $1 of assets held by someone.

Ace Capital - www.acecapital.com.au - Professional and Knowledgeable Finance Brokers - Email or call 0400 808 368

lol.......

 

[Graemsay]

I don't know if I'd trust the Telegraph as a source.

There's a high level of scepticism about the European project amongst the right wing in British politics, and the current crisis is being presented as justification for their beliefs. Their position is that a collapse will allow the government to re-negotiate membership, typically along the lines of remaining in the European free trade area, whilst skipping all the troublesome bits such as Human and Employment Rights legislation and membership contributions.

The Telegraph is reflecting this view in its editorials.

I think that the situation is serious, but that the financial sector is taking a short position against Italy, and this is making funding more expensive for the country. So it could well be a self-fulfilling prophesy.

There are calls for a quantitative easing programme by the ECB, but, frankly I'm not convinced that firing up the printing presses and borrowing more is a way out of a debt crisis.

 

[Sunfish]

Originally Posted by Aaron_C
So....who's holding all those Italian bonds exactly? For every $1 of debt created there has to be $1 of assets held by someone.

This, of course, is counter party risk. The only asset without it is Au/Ag in your possession. There is sovereign risk everywhere, so much that the US$ surged last night as a "safe haven". LOL

The funny thing is that Italy has a very large gold holding. Forget the figures but it could support their debt about 25c in the $. Thats good by international standards.

Even the A$ is back to US$1.01.

BTW CNNMoney has a headline:

China's rapid inflation cools
The Chinese government is getting just what it aimed for: lower inflation, while still maintaining robust economic growth. More

I haven't read the article but it shows just how hard it is to know where the next hand grenade is coming from. I just know it is unsafe to take off your tin hat.

BTW The fat italian lady is singing is an excellent heading.