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Berlusconi going, going, gone?
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I mentioned before that with debt there would appear to be multiple equibria - for example Italy could service 100% GDP debt forever at less than 3% interest rates and at those rates it would not be a credit risk so there would be no reason for rates to rise.
But then given a perturbation in rates (lets call it 'contagion'), rates might go above some level where suddenly it is no longer certain that the debt can be serviced in the long term at which point rates start to increase further as a risk of default premia is added and then quickly spiral out of control. Thus what was a sustainable level of debt can also be unsustainable.
Possibly multiple equilibria is the wrong term as the is only a single equilibrium range beyond which is a chaotic spiral to default.worldtraveller wrote: »They just hit 7.43% :eek:I think....0 -
- for example Italy could service 100% GDP debt forever at less than 3% interest rates and at those rates it would not be a credit risk so there would be no reason for rates to rise.
Italy needs to refinance around £300 billion of debt in 2012. Who wants to lend at 3% when returns at a lower risk are available elsewhere.0 -
I notice the the "swap" insurance is 5% so you get a net 2% (ish) on Italian "paper".0
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I loved the piece on the BBC this AM about Italian bond yields hitting 7% which ended 'one piece of good news, German trade surplus hits a new record'. They still don't get it that the German trade surplus is the problem.
Saint John Maynard Keynes wanted to impose some sort of fine on countries in perpetual surplus - which in those days might well have been USA - somehow the moral rectitude of the rich got in the way and it never happened.
Surprise surprise.
http://en.wikipedia.org/wiki/John_Maynard_Keynes
In June 1919 he turned down an offer to become chairman of the British Bank of Northern Commerce, a job that promised a salary of £2000 in return for a morning per week of work.
Plus ca change...............0 -
Greece now has a new PM.
A former European Central Bank vice president!
Oh the irony. Bet the Eurocrats LOVE it!!
Only the very man who oversaw Greece's entry into the Euro!!!
Couldn't make it up really.0 -
Interesting! Unlike the military coup of 1967 there are no tanks involved and political activists are not being arrested or having guns held to their heads. But, an elected Greek government is now being financially [STRIKE]blackmailed[/STRIKE] forced, by largely unelected uber-elite technocrats in Brussels, to end political debate and shelve normal democratic procedures, in order to install a government of technocrats to do their bidding.
Greece, the birthplace of democracy...........
There is a pleasure in the pathless woods, There is a rapture on the lonely shore, There is society, where none intrudes, By the deep sea, and music in its roar: I love not man the less, but Nature more...0 -
Graham_Devon wrote: »A former European Central Bank vice president!
Seems as if the reality is sinking in. As this is a fiscal rather political appointment.
Some would say about time too.0 -
worldtraveller wrote: »Interesting! Unlike the military coup of 1967 there are no tanks involved and political activists are not being arrested or having guns held to their heads. But, an elected Greek government is now being financially [STRIKE]blackmailed[/STRIKE] forced, by largely unelected uber-elite technocrats in Brussels, to end political debate and shelve normal democratic procedures, in order to install a government of technocrats to do their bidding.
Greece, the birthplace of democracy...........
No one really seems to care though....not even the Greeks appear to be that upset. The rest of the world just wants whatever it takes to save their own backs.0 -
Graham_Devon wrote: »No one really seems to care though....not even the Greeks appear to be that upset. The rest of the world just wants whatever it takes to save their own backs.
There is probably a lot of truth in that Graham and it's exactly what the power crazed elite EU political class must be loving. It's their perfect opportunity to hoodwink us all, extend their powers and change their treaties, under the threat of armageddon, until it's too late to change back. This whole current situation, although a massive issue, is all a tiny part of EU history, but it's likely to have far reaching effects for generations to come.There is a pleasure in the pathless woods, There is a rapture on the lonely shore, There is society, where none intrudes, By the deep sea, and music in its roar: I love not man the less, but Nature more...0 -
Italy’s Senate will vote on debt-reduction measures today in an attempt to shore up investor confidence and pave the way for a new government that may be led by former European Union Competition Commissioner Mario Monti.
Bloomberg
Anyone see a pattern to this?
There is a pleasure in the pathless woods, There is a rapture on the lonely shore, There is society, where none intrudes, By the deep sea, and music in its roar: I love not man the less, but Nature more...0
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