As far as I can tell none here is an expert on this subject so we form opinion from what we read and judging from the results of the economic reform in Europe. I don't claim to be an expert but I happen to follow the issue closely and probably more than some others who claim to know more....
The fat italian lady is singing
- Thread starter TomW
- Start date
As far as I can tell none here is an expert on this subject so we form opinion from what we read and judging from the results of the economic reform in Europe. I don't claim to be an expert but I happen to follow the issue closely and probably more than some others who claim to know more....
It is a good thing the Italian lady is fat!
She is going to need the fat as she is about find it hard to out food on the table.
I personally think Italy is now beyond help...being a $USD 2 Trillion economy (doube Australia's GDP with 3 times the population) and the 7th largest in the world it is going to get interesting!
I think my call of another rate cut in Dec. 2011 is looking pretty good. Albeit...I think the RBA will only do another 0.25%.
Interesting times indeed....with Corporate downsizing...the outlook for Australia looks a bit uncertain.
She is going to need the fat as she is about find it hard to out food on the table.
I personally think Italy is now beyond help...being a $USD 2 Trillion economy (doube Australia's GDP with 3 times the population) and the 7th largest in the world it is going to get interesting!
I think my call of another rate cut in Dec. 2011 is looking pretty good. Albeit...I think the RBA will only do another 0.25%.
Interesting times indeed....with Corporate downsizing...the outlook for Australia looks a bit uncertain.
TomW is right - once bond yields exceed 7% the interest and tax base recouped goes out the window to pay the bonds, with nothing left in the kitty for public works.
with Greece, bond yields are around 90% - that is incomprehensible on how that is going to be paid.
the ECB want Germany's gold as a reserve and are now eyeing Italy's 2400t, but the Greeks are claiming some of Germany's gold that was stolen during WW2. I think there's some cheek in that, they owe Germany regardless.
But Germany's reserves are held in the US......
with Greece, bond yields are around 90% - that is incomprehensible on how that is going to be paid.
the ECB want Germany's gold as a reserve and are now eyeing Italy's 2400t, but the Greeks are claiming some of Germany's gold that was stolen during WW2. I think there's some cheek in that, they owe Germany regardless.
But Germany's reserves are held in the US......
I'm not sure it would be easy to remain focused on A$ exchange rates when you are caught in a maelstrom.
The world leaders are trying to avert The Greater Depression. (They won't actually use those words of course) A few points on your loan will be neither here nor there. He who loses least will win.
before we start trying to post who has the bigger scare story consider a couple of facts.
(a) The italian population is actually very wealthy by global standards. Household debt is only 78% of disposable income. Compare this to the USA (130%) and Germany (100%). Further more Italians have 8.6 trillian in NET WEALTH. This equates to wealth per household of $350,000 euro. 10% more than Australia. Therefore one of the underlying requirements is better taxation of that wealth.
(b) Sunfish mentioned gold deposits with their central banks. Well the Italian government owns a hell of a lot of other assets as well. Some of these assets if privatised will go along way towards paying down their debts.
So the fundamental problem with Italy is not the debt itself, but rather
(a) the fact that they are now running a structural deficit. This needs to be closed.
(b) taxation needs to be more efficient
(c) state assets need to be privatised.
This is a political problem. There is squabbling about how to achieve this. The bond markets dont like it, so they are forcing the issue through rises in the yields (which makes refinancing more difficult, which forces action).
Short term this will have the effect of increased volatility in the financial markets as a whole, but make no mistake this is more of a short term issue, than a long term structural issue. If the Italian government tries to throw a temper tamptrum, the bond markets just bring out the big stick.
(a) The italian population is actually very wealthy by global standards. Household debt is only 78% of disposable income. Compare this to the USA (130%) and Germany (100%). Further more Italians have 8.6 trillian in NET WEALTH. This equates to wealth per household of $350,000 euro. 10% more than Australia. Therefore one of the underlying requirements is better taxation of that wealth.
(b) Sunfish mentioned gold deposits with their central banks. Well the Italian government owns a hell of a lot of other assets as well. Some of these assets if privatised will go along way towards paying down their debts.
So the fundamental problem with Italy is not the debt itself, but rather
(a) the fact that they are now running a structural deficit. This needs to be closed.
(b) taxation needs to be more efficient
(c) state assets need to be privatised.
This is a political problem. There is squabbling about how to achieve this. The bond markets dont like it, so they are forcing the issue through rises in the yields (which makes refinancing more difficult, which forces action).
Short term this will have the effect of increased volatility in the financial markets as a whole, but make no mistake this is more of a short term issue, than a long term structural issue. If the Italian government tries to throw a temper tamptrum, the bond markets just bring out the big stick.
Please continue to ignore every FACT in post #8 and what I have said in this thread. Clearly you know "the only way out" so no amount effort could convince you otherwise...... I give up........ clearly I am the one who has no idea about counter-party risk, fractional reserve banking, central bank economics, the fiat currency system, the EU/ECB/EFSF structures or the current economic climate.
Your truthful insight is crushingly painful.... I would give you kudos, but I am all out... Here is some notional kudos
Why does this phenomenon exist? It truly is baffling how little people actually KNOW about economics and the currency system..... particularly those that claim to be investors..... it is like being trapped in a scene from Alice in Wonderland.Very few are willing to open their mind to the voodoo of fractional banking.
I have watched many videos and read about it for years, and still have trouble accepting ALL of it.
And Euro countries CAN'T run the printing presses. The best they can hope for is the IMF bailing them out with SDRs.
Even if the whole of Europe eventually agrees this is the only acceptable solution to the problem? Are you sure?
Indifference, a little humility goes a long way... if you think it's bad in the currency threads, you should check out the carbon ones!
Shuggy
If Europe does implode this is going to lead to lower demand for Chinese goods and this will ultimately lead to lower commodity prices. Lower commodity prices leading to a lower aussie dollar. Just my two cents worth.
If Europe does implode this is going to lead to lower demand for Chinese goods and this will ultimately lead to lower commodity prices. Lower commodity prices leading to a lower aussie dollar. Just my two cents worth.
I think you will find most of the products for Europe are sourced from places like Turkey and lower cost European nations.
Well that was the case when I was there. Some also come from Latin America. So doubt it is a big affect.
China's growth is now due to internal demand.....so it will be affected if internal comsumption drops.
Well that was the case when I was there. Some also come from Latin America. So doubt it is a big affect.
China's growth is now due to internal demand.....so it will be affected if internal comsumption drops.
If you know the subject well then argue the point and don't attack people
Great post and kudos (apparently I have to spread myself around) ... and I believe this is THE major deterent of a solution for both Greece and Italy.
They know what they need to do but both prefer to defer and bury their heads.
Is that what they're doing ?
What should they be doing ?
Of course we wouldn't be that stupid in Australia would we...how silly are these people
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 thought there was an error in this calculation. So I opened excel and pligged the figures in.
$100 million a day is 36.5Billion a year times 400 years is $14.6 Trillion,
which is actually shy of the current US debt based on their debt clock ( http://www.brillig.com/debt_clock/ ) of $14.988T, so it will take 410 years to repay at that rate.
Then I thought I would work out what the simple daily interest is on that debt at 3.5% pa interest rate (ignoring compounding).
The daily interest bill is only $1.44 billion!
People sholuld note that this is just the US Federal debt. It does not include state or munucipal debt, nor does it include underfunded social security and medicare liabilites and unfderfunded sate and local pensions.
I think I read that the total of all these liabilites is the same size as the US national debt.
Not a worry; the US govt has recently lifted the debt cieling; whats a few Trillion between friends?
no mate, Turkey and Poland, believe it or not. just look at where stuff sold at IKEA is made.
*edit - just read sash's post*
If the sharemarket is about to fall off a cliff, this can be a VERY profitable exercise.
Just short it.
That's what im gunna do.
should pay a good chunk of my ppor off
Just short it.
That's what im gunna do.
should pay a good chunk of my ppor off
Aaron and sash
Thanks for that. at least one less thing to worry
About
Thanks for that. at least one less thing to worry
About
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