Can someone please explain the eurodeal?

HAMISH_MCTAVISH

Generali wrote: »

The problem is that you can't bail out Spain and Italy. They're too big to fail but also too big to save.

Which is precisely why any steps taken now must be decisive enough to guarantee market participant dare not try it on.

This is no longer a liquidity crisis, nor even a solvency crisis, this is now purely a political crisis.

The solutions are there. But the politicians are going to have to grow a pair.

If Spain and Italy were to ....

Which is why the German plan of conventional monetary strategy is doomed to failure, IMO. Not even Germany can backstop European debt.

Absent a strong recovery in the next year or two, they'll almost certainly need to print eventually, because the current bailout package is too small.

But the irony of it all is that in refusing to countenance printing now, they almost guarantee sufficient market instability to destroy any chance of a strong recovery.

It's catch 22.

The only solution is to present such overwhelming firepower that the other side gives up and goes home. What we have at the moment are half hearted responses that just kick the can a few months down the road and open the door for market speculators to keep biting away at the weak members of the pack.

It's death by a thousand cuts, and it's being caused by the absurdly weak actions (or inactions) of politicians.

In that spirit, what do you think the problem is with Eurozone debt? Is it too much debt or not enough lenders for example?

Neither.

It's not enough confidence.

Japan quite happily hums along with 200% plus debt to GDP, because Japan can borrow at reasonable market rates.

It is a testament to the utter failure of European politicians that the collective tax revenue of 400 million people from today until infinity was not enough to protect a country as small as Greece, with a debt as small as Greece's, from the speculators.

Generali

HAMISH_MCTAVISH wrote: »

Which is precisely.....speculators.

Good points all. In reply I make 2 simple points:

1. This isn't like the ERM (1992 and all that). EU Governments PIIGS and core states alike are running deficits. That means that over time they need an increasing demand for their debt just to keep up with current plans. The problem with selling the debt isn't that some beggur keeps shorting, it's that investors don't want to buy yet more debt. If you have gross assets (not even net) then ask yourself this: 'Are you holding Eurozone Government debt? If not why do expect other people to buy it?'

2. Japan is able to borrow very cheaply because her citizens are happy to lend to her cheaply. Would you lend to the British Government at a fraction of a percent or would you seek out a few percent in a deposit account by preference? Given that you are posting on this forum I think I know the answer to this question.

1984ReturnsForReal_2

Run to China..............

Generali

1984ReturnsForReal wrote: »

Run to China..............

Apparently they're the saviours of The West. I don't know if you've read much about how Chinese banks are lending off balance sheet but IMO there is a reasonable chance that China will run into some of the same problems the US has.

Catapa

homelessskilledworker wrote: »

1. Its foundations are built on huge debt

2. It's survival to date has been purely being rigged through throwing more bad money after more bad money at it.

3. Amazingly it has held up it's value even though everything on paper says it should fall like a stone.

The Euro zones combined debt ratio is lower than the UK's and much lower than that of the USA, Japan or Hungary. That is why the value of the Euro has been going up soon after the first year of attacks on the Euro after its inception, despite all attempts by the Daily Mail, Telegraph and the media controlled by the Murdochs, Diamonds etc.

Road_Hog

gailey wrote: »

Can someone please explain the eurodeal

Thrugelmir

CLAPTON wrote: »

we are the 6th largest manufacturing country in the world

and has been in decline since the 1960's.

Now only around 9% of the UK workforce are directly employed in manufacturing.

Retail employs a higher % than this.

Thrugelmir

CLAPTON wrote: »

now so far all the talk is about debt

but Greece has a budget deficit i.e. the government is spending more than it's raising in taxation
now I've read (but anyone knows for sure please add) that they run out of money in November /early Dec
realisticaly no-one believes that the greek government will raise any significant money from selling off state industries or in raising taxes

the debt haircuts etc don't address the imminent greek cash flow crisis

so whats happens in November
germany /eu gives greece money or buy greece newly minted bonds?

After the headline issues are resolved. Then starts the task of balancing the budgets. As what's unaffordable can no longer be paid. Tough time for the politicians. As the answers although obvious aren't going to be easy to implement. .

Generali

Thrugelmir wrote: »

After the headline issues are resolved. Then starts the task of balancing the budgets. As what's unaffordable can no longer be paid. Tough time for the politicians. As the answers although obvious aren't going to be easy to implement. .

It's going to be the end of the welfare state in its current form IMHO. You can tinker around with the rest of the budget but the welfare state is by far the biggest line item and it produces negative GDP for the most part.

Road_Hog

Generali wrote: »

It's going to be the end of the welfare state in its current form IMHO. You can tinker around with the rest of the budget but the welfare state is by far the biggest line item and it produces negative GDP for the most part.

I'm in agreement with you on the welfare state and also the NHS.

But my view on why might be for different reasons.

I believe that it is deliberate. I believe the globalists want to break both the welfare state and the NHS. The welfare so that there is no option other than to work in minimum wage* (which in years to come will probably be worth less in real terms, the Irish have already reduced their minimum wage). Your other choice will be to work for the state, which has an ever increasing percentage of the workforce.

Obviously the capital globalists will want to reduce their wage cost base down as much as possible, possibly to third world wages. The socialist globalists want control,as they always do, therefore they would like everybody working for them and on their payroll. It's why NuLab increased public sector workers by one million, allowed so many on to a myriad of benefits. Remember if you're benefits, you're as good as a state employee, you're being paid by the state. It's also why Gordon Brown like tax credits rather than getting people on a decent wage or lifting the tax allowance to a level that exempted these people from tax. Because when you're receiving tax credits, you're again a part time state employee.

For those that start shouting conspiracy theory, you have to ask yourself why we allow unfettered immigration, not just from the EU but from other parts of the world. Why do we allow people to claim benefits that have never ever worked here of paid a penny into the system, why are we bringing in more immigrants when we have more than 2.5 million on welfare already and the country is broke. Ask yourself why we have changed the laws so that one section of the community, that is the fast growing and is currently doubling every 10 years, can have up to four wives when polygamy is illegal and claim benefits for all four wives and offspring. There is no logic in doing that, how on earth is someone with four wives and 8+ offspring ever going to be able to earn enough to support his family.

The same logic applies to the NHS, it's already under strain, yet we let all the health tourists have free treatment despite not paying a penny for the service. With all the immigration we have we're now having to deal with TB that we eradicated and all sorts of other problems this brings.

* To those that say good, I'd like all the scroungers to have to go out and work minimum wage. I'm all in agreement that long term skivers should be given incentives to work, but that's not what this will be about, this is about driving down wage costs and it won't just affect the work-shy.

Even back in 2004, the Guardian of all people was predicting the erosion of the welfare state due to multiculturalism (that's a liberal word for immigration).

http://www.guardian.co.uk/politics/2004/feb/24/race.eu