How Much Spanish Government Debt Should the UK Government Take On?

StevieJ

Generali wrote: »

There has been some discussion on another thread about the solvent countries in the Euro bailing out the 'PIIGS' (Portugal, Italy, Ireland, Greece, Spain). So I was wondering if the UK Government was asked to help (as a fellow EU member country it would be highly likely IMO), how much Spanish Government debt would you be happy for the UK Government to take on?

Hey wait a minute, I thought it was the UK that had the worst economy, deficit, future pension funding etc.

Wookster

Who will bail out the UK when we go default?

chopperharris

So what will come from this to devalue the quid , which as we are told isnt neccesarrily a bad thing for our exporters.

Greece got themselves into this problem with relying on tourism too much , then when the income went down the put prices up and everyone went elsewhere that was cheaper.

Spain too has a high income level generated from street vomitters on thier jollies.But also has a high exposure to builders debts , something that the likes of spanish banks havent been too good at letting out to the media about the costs.

Italy has had a long history of bad money problems , tourism is pretty much less of an impact as opposed to the other piigs.

Portugal has a tourist industry thats starting to suffer , getting real data is a joke as one paper will say they do well and another says the opposite.

Ireland had a boom with joining the euro , lots of property bought overseas , big employers like intel practiced the art of the withdrawal method recently.

So what does it mean , tax breaks , cheap holidays , cheap properties to get their deficits in target?

If so then how will the big two in the eu cope with that , germany and france wont like jobs going to the piigs through incentives of cheaper labour , rates and taxes.

The french will revolt when jobs go to their neighbours , much like how they wont compete on the milk market in europe , instead put it down the drains instead of selling it at the market rate to keep prices high with handouts from brussels.

...they will just encourage them piigs to concentrate on tourism ,and making the wine lakes , meat , and dairy mountains even higher.

It beggars beleif that the eu tells the uk to sell off banks on competition grounds yet doesnt sing from the same hymnsheet itself when it comes to farming , car makers etc.

chucky

Wookster wrote: »

Who will bail out the UK when we go default?

don't know - we've got to default first and it's not likely to happen.

sabretoothtigger

michaels wrote: »

Hmm - but what would a Spanish default mean for Santander who own a large part of our banking system - would this require a UK paid for rescue a la icesave? How much would that cost?

Santander operate each subsidiary with its own capital allocations which is the opposite of how RBS did it I think. Last spring, they shuffled some money around to make sure the FSA tests were passed and the uk parts can hold their own

I presume they hold a large amount of spanish gilts or otherwise Im not sure they'd automatically suffer as they are a global bank not spanish


The answer to question of funding for these countries is to stop spending more then you can afford. The reason they dont is apparently the economy will falter without governments overspending, does that make any sense to any normal citizen who pays their bills.

What might be true is government is causing more harm then good and it'll be a double positive if they cut back. We wont know till someone tests this radical policy

HAMISH_MCTAVISH

Generali wrote: »

We're seeing it.

Well at least Moody's agrees with me, for once.....:p

Lisa Hintz of Moody's said: "Make no mistake, a Greek default is another potential credit crisis in the making... it is not just the writedown of Greek debt; it is the mark-to-market of other sovereign debt.

"That would bankrupt the bulk of the European banking system, which is why it is unlikely to be allowed to happen."

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7238035/Most-Germans-want-Greece-thrown-out-of-euro.html