Who's next? Spain? Italy?

worldtraveller

Stocks closed out their worst month in more than a year by sliding again on more unsettling news about Europe.

The Dow Jones industrials were down by nearly 100 points Friday after Spain suffered the second downgrade of its credit rating in a month. The rating agency's action was another reminder to traders of the long-term economic problems still facing several European countries, and ultimately, the rest of the continent and the global economy as well.

Fitch cut Spain's rating by one notch, saying the country's plan to cut its budget will likely slow economic growth. Mounting debt forced Spain, among other European countries, to recently impose austerity measures to try and contain its rising deficit.

The rating agency also cited the recent bailout of a regional bank by Spain's central bank as a sign that the country's economic recovery will lag. Earlier this month, Standard & Poor's lowered its rating of Spain's debt. Greece and Portugal have also suffered downgrades.

Stocks were already down before the news about Spain broke in early afternoon. Investors nervous about Europe were taking money out of the market to play it safe ahead of the three-day weekend, especially since overseas markets will be trading on Monday when U.S. exchanges are closed for Memorial Day.

AP

No surprise there then!

Generali

Rochdale_Pioneers wrote: »

And if its like last time we had 18 years of the Tories can we once again expect 2 crushing recessions, prolonged unemployment north of 3m, prolonged 10% interest rates, mass repossessions and bankruptcies?

Probably not because despite the epic fail that the past 13 years of Labour rule has represented, they haven't come close to the enormous screw up that was the UK in the 1970s so the cost of fixing it will be lower.

headcone

Generali wrote: »

Probably not because despite the epic fail that the past 13 years of Labour rule has represented, they haven't come close to the enormous screw up that was the UK in the 1970s so the cost of fixing it will be lower.

To attribute the present situation to an epic Labour fail is ridiculous IMO.

No government since the second world war has been faced with the catastrophic consequences of self inflicted wounds.

Capitalist greed has enabled the few to prosper at the expense of the many.

And without penalty which is sad.

Generali

headcone wrote: »

To attribute the present situation to an epic Labour fail is ridiculous IMO.

No government since the second world war has been faced with the catastrophic consequences of self inflicted wounds.

Capitalist greed has enabled the few to prosper at the expense of the many.

And without penalty which is sad.

Did you really fall for the scapegoating of the bankers? It's quite sweet really.

headcone

Generali wrote: »

Did you really fall for the scapegoating of the bankers? It's quite sweet really.

Sweet it may be my bailer out of britain cobber.

But RBS,HBOS,NR, required so much taxpayers money to prevent social meltdown that you make a clown of yourself attempting to defend them.

Socialism saved Capitalism and not for the first time.:cool:

Generali

headcone wrote: »

Socialism saved Capitalism and not for the first time.:cool:

Ahhh bless

headcone

Generali wrote: »

Ahhh bless

No less succint than i would expect from a serial loser.

worldtraveller

Greece’s surprise call for a referendum on its new bailout deal dashed hopes that the latest plan of attack for the euro zone would could soothe sickly financial markets. It also set off some warning bells in the bond market that could again ratchet up the pressure on Italy.

Italian debt was hit hard by the referendum news, particularly at the short-end. Ten-year yields also rose sharply to 6.37 percent — the highest since August, when the ECB first began intervening in the secondary market.

Nick Stamenkovic, strategist at RIA Capital Markets, echoed the sentiment: "If we continue at this pace we will be going down the same route as Greece, Ireland and Portugal and then they will have to come in and support Italy."

Reuters

Flight2quality

The world is in an absolute mess, economically, financially, politically and morally. The only thing that has not been clear is how long governments and central banks could deceive the people by kicking the can down the road in an endless creation of worthless pieces of paper that they call money.

Generali

HAMISH_MCTAVISH wrote: »

And our National Debt to GDP ratio is actually far better than many others....

US: 97.5%,

UK: 72.7%,

Germany: 86.6%,

France: 80.3%,

Italy: 121.1%,

Japan 227.4%

I had this argument a few times with Rochdale_Pioneers. The problem isn't relative it's absolute. High taxes are a huge drag on an economy (Google 'dead weight loss' to see why) and high debt can only be supported by high taxes.

5% is a reasonable long-term financing cost. That means that by the end of the financial year it is reasonable to expect that the interest bill alone for the UK will be about 4% of GDP which is about 10% of the maximum that Government spending should be under a socialist Government (40% of GDP - I'd rather see it at 20-25%).

HAMISH_MCTAVISH wrote: »

Probably worth mentioning Japan hasn't had any trouble financing it's debt....... After 2 decades of running excessive deficits and significant QE.

Japan is almost certainly a unique case. It has a crushingly high debt which is almost entirely (90%) owned by domestic individuals. Not mutual schemes or pension funds but directly held by 'Mrs Watanabe' because they trust it and because Japan has a pretty old population (well over a fifth are over 65) and they want very low risk places to park their cash. They presumably believe in one of the great Warren Buffet homilies:

There are 2 Golden Rules of Investment

1. Don't lose money
2. Never forget rule #1.