Sunday 9 May 2010

UK election; not even a sideshow thanks to the German Election

That Greek thing, you the one we all keep talking about but no one does anything about?

Well it is a big deal in Germany, the people there like their savings and stable currency and do not want to jeopardise this for anyone else. In fact they have just voted in the largest state and Chancellor Merkel's party have lost.

This mean the EU bailout is again under pressure. The markets tomorrow are going to tank unless there is a big announcement tonight. Basically, the EU core needs to make like the bank crisis and bail out the PIGS or else we are in armageddon.

However, much like the bank crisis, this maybe a short term answer to longer term disaster.

Anyway, rest assured, no one in the markets it thinking about Cameron and Clegg, they will have a few days yet, albeit the FTSE is going to really struggle to stay over 5000 and UK Gilts are likely to go north of 4% yield.


Nick Drew said...

Good piece by Mark W here

BTW, you had this sussed 3 years ago if I recall, CU (except you thought it would be Spain)

Nick Drew said...

Incidentally, Merkel's little electoral embarrassment will stop her planned revival of Germany's nuclear power sector dead in its tracks

will write abt this later if I get a moment

Mark Wadsworth said...

ND, ta for link.

In terms of stock exchange mythology, I am quite glad that Gordon B is hanging on in there. As any fule kno, the FTSE 100 has always fallen* under Labour governments - it was at 4,445 when Blair took over, so it is just possible that it will fall back the required 11% or so to end up below that in the next week until Dave'n'Nick finally wrest the keys from his grasp.

* Unlike most proper indices, the FTSE 100 is not adjusted upwards for notional reinvested dividends, but if we adjust up for dividends not included and down for inflation, a nominal fall is more than likely a real terms fall as well.

Cotswolds BB said...

"The FTSE is going to really struggle to stay over 5000 and UK Gilts are ".

FTSE up 200 this morning.

Mark Wadsworth said...

CBB, that's me told :-)

Nick Drew said...

not really - they as good as announced the deal is on before markets opened

playing with fire, though, if there's an outbreak of Silly Buggers later

Philipa said...

Market went up today.

roym said...

goodness, a lot of fretting on here this weekend.

The CBI says no need to panic!

MWs thing about the FTSE is like some sort of reverse wish fulfillment just to maintain an old truism. almost like those who believe in global warming want it to heat up, just so they can tell the "deniers" to shove it!

this time tomorrow, Brown will be out the door and Dave's neighbours can have their parking spaces back.

CityUnslicker said...

As I said, IF a deal is not agreed. A deal has been agreed, so markets bounce!

Anonymous said...

Kicking the can down the road!

In the medium to medium/long term, nothing has been acieved, nothing.

There is almost $1T on the table, plus ECB buying bank and gov't underwater paper, intervention in the markets per Lux chiefs, and various pledges..

Bernanke has opened his $ swap window involving Bof Canada, BofE, ECB, SNB, and BofJ


The PIIGS need $2T over the next 3 years, and that's based on nosebleed levels of growth, which ain't gonna happen...not in this universe. Greece will NEVER get its house in order, they will be back at the debt trough way before the calculated time.

Who'se gonig to take the rollovers and the new debt?.....the ECB to keep the long end down(QE).....but the only buyers MAYBE are looking at extreme short end.

It will be another bailout down the road, or ECB gets stuck into some serious QE to the tune of several $T. Maybe over $5T over a few years.

The mirror between the $ and the Euro has been removed, the $ now falls slightly. Bernanke has a problem to sort before the midterms.

I'll believe in western fiscal rectitude when the US stops warmongering, and starts closing some of its 700 worldwide military bases,and ditches a few ongoing military procurement contracts,.. and the UK follows...together with a few other cuts that would screw Tavistock and its mindless Zombies.

At this point western nations hyperinflation, with all its attendant evils, is more or less built in.

Chance of the EU standing in 10 years is less than 50%...civil war.

The fat lady is on the final verse.

Anonymous said...

Paper money eventually returns to its intrinsic value – ZERO - Voltaire 1729

If they knew about it then, why do they persist now?

Lets not forget the $600T derivatives floating around the world. Created by the worlds richest entities, many parasitic in nature, with creators determined to be richer, and determined to be the last folks standing.

Last folks standing will control.

Anonymous said...

"There will be terrible times in the last days. People will love themselves. They will love money. They will brag and be proud. They will destroy others...They will say they are serving God, but what they do serves only themselves. Have nothing to do with them." 2 Tim 3:1-5

The limit to the ability of a central bank to create money is the acceptability of the underlying bonds and currency.

When a central bank turns to buying the bonds in order to support their price, or more properly the interest rate paid, this is the beginning of the end, the point at which the national currency becomes little more than a Ponzi scheme, creating more money to pay the interest on the old money.

Now both the US Federal Reserve the Bank of England, and the ECB have fallen into this. We are seeing the controlled demolition of the fiat currencies of the developed world.