Monday, 7 November 2011

It's a knockout; Italy vs Greece

Well, we can't complain that Monday's are boring anymore in Europe. Italy's bond spreads are headed up at a remarkable rate today.

What level do they have to reach to force Berlusconi to resign? I think 7% but can anyone show me a decent price on this? He has to reach a vote on the 9th November so I guess he may hang on to this on the other hand

Meanwhile, Greece is also looking for a new Prime Minister to do the decent thing and roll over for Merkel and Sarkozy. All without the people having their say. In the long-term, the politco's are going to really regret the way things are working currently. With little legitimacy for events that are more economically damaging than wars, they are not going to avoid massive social unrest. All those calling for politicians to do their jobs are underestimating the gravity of the situation. Also, unlike in say WWII, the people have been lied to for a long-time and so are neither amenable nor acquiescent to the decisions being made of 'their' behalf.

Nice start to another exciting week...


Sean said...

A central bankster installed in Greece to manage the debt servitude, And Silvio handed his cards, whatever next?

Italy or Germany, one of them is going to go out. reading the comments of the northern league guy yesterday you wonder if Italy has a plan Z tucked in Silvios pants.

The fact is the problem for Italy is not the debt but the euro.

Nick Drew said...

Nice start to another exciting week...

Last week Cannes, this week Nice - you do get about, CU

Anonymous said...

Ah, remember the old Ialian Lira with all those noughts on it? That's what happens when your national debt keeps forcing you to print more money to inflate your problems away.

They thought joining the Euro would solve their inflation problems, when all it did was take away the old solution for all their debt problems. Now they're screwed.

CityUnslicker said...

ND - if only Nice this week rather than a rather dark and dreary City.

Anon - spot on, inflating away your problems is the answer to them, without it...who knows.

hovis said...

"All those calling for politicians to do their jobs are underestimating the gravity of the situation."

Indeed! I know I keep banging on about it, but the Papandreaou referemndum call was forced on him due to his unpopularity at in general and in his party. I really dont buy the line it was bargaining ploy. I have some links with Greece and the situation there is far worse than the press here indictes. Greece is far pooer as a nation so the cuts truly bite. (Many unpaid for 3 months now.)

So the referendum was logical and the only plausible solution to try and get a tiny shred of legitamacy.

Btw the "coalition" wont hold nor will they be able to deliver, there is no sense of unity only of betrayal by the politicians.

But that's all in the past, as Italy will be toast soon - I recall one of you CU? ND talking of domino's falling slowly a while go - well the pace will quicken beyond belief.

Merkosy should have coughed a transfer union a lot quicker if they wanted to survive.

Anonymous said...

I wonder why Italian bonds are only 6.5%? Given the EU forced Greek bondholders to take a 50% haircut ANY euro-zone bonds on highly indebted sovereigns are looking highly dangerous in the current climate. Why would you take the risk with Italy when you can take Germany or the UK for a few % less???? Games being played somewhere, CU? Just a question of time? Or maybe ECB is the only player in town....

Anyway the game will surely be over when Italy has to roll-over that 300bn. I don't see people queuing up to buy and yields are sure to skyrocket.

Anonymous said...

Greece or Italy?

Which do you think will offer the best value for next year's summer hols?

My feeling is Greece. Plenty of empty beaches as the Germans will not be welcome next year unless Merkel coughs up the cash - which she is unlikely to.

Laban said...

It seems that the whole euro debt caboodle will hit the buffers in short order unless the ECB starts printing. Europe hasn't got the cash, the Chinese won't lend it, and the Yanks and the Brits, not squeamish about debauching their own national currencies, don't see why they should stump up for Europeans too prudish to debauch theirs in their turn (and they haven't got the money either, unless they print more).

Everyone seems sure that the Germans won't stand for it, memories of Wiemar and all that.

Personally I hope they won't, but so far Merkel has allowed herself to be dragged down the bankers road no matter what the German courts say - and she's taken German MPs with her. Will she really be prepared to say 'Nein', knowing it means defaults all over Southern Europe, France in the firing line, banks going under everywhere ?

I have my doubts. I think they'll print - when they've exhausted all the other options.

Anonymous said...

Laban - I don't think it is just the Germans. The ECB has always had a "hard-currency" policy, as they retain drems of replacing the yankee $ as the world's reserve currency. At the moment it seems the ECB would happily watch people starve on the streets rather than than print their way out of the mess they are in and get the real economy moving again.

By the way, electronic business down 30% in Europe across all sectors and has been since the summer, so those Q4 figures aren't likely to offer hope that rapid growth will bail out the Eurozone. Print or be damned I say.