It's in the list, maybe because it has only a AA rating.Originally Posted by Crazy_Ivan80
It's in the list, maybe because it has only a AA rating.
"Wer Visionen hat, sollte zum Arzt gehen." - Helmut Schmidt
there is no Belgium, only Flanders. The rest of the country (Brussels & Wallonia) has junk rating.
I did not present it as a likely scenario, but as a possible scenario that would not involve a fundamental rethink of the EMU, which Wiggin thinks is the only way to deal with this crisis. It would cause a lot of volatility, but it would also put an end to private profit dependant on socialising losses.
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The problem with your scenario is that most of the private investors who will lose are German/French/etc. banks that have high exposures to Greek debt and rickety reserves. In a serious Greek default (let alone an Irish or Portuguese one), some of these banks are going down. If enough go down, the German/French/etc. government will have to step in to prop them up (or will face losses in other ways through secondary effects). So, one way or another, they're paying for having a monetary union without a sufficient amount of fiscal union.
Actually, I'm pretty sure that there isn't Belgium or Flanders, but there is Brussels and Wallonia.
In the land of doubles, that is.
LOL
@wiggin: i didn't say it's going to be pretty (wipe out private equity) or cheap, but it is a way out of this mess that doesn't involve breaching rules or changing them, nor making steps towards fiscal union. It would make the bonuses in EU banks somewhat meagre, but that won't make it less attractive to the politicians. It also would not cause questions about moral hazard.
Of course it would mean a mortal blow to London, but as this is 'just a euro crisis' they shouldn't mind about that.
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Ah yes, everything gets back to the Brits. Nevermind once more that London is the least exposed to all this. If it the French and Germans who have the most to lose, while the British banks are not only less exposed they're also far more secure. So I'd like to see any evidence for that claim at all.
The questions about moral hazard are already there. Doing what should have been done 3 years ago isn't going to put the genie back into the bottle.
British banks will be hit through banks in the EMU and by the highly likely spreading of default to Portugal and Ireland. You seem to think this is just a matter of looking at who has how much Greek debt on his books; it is not.
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You don't think wholesale failure of German and French banks would result in a moral hazard situation? Do you honestly think the German and French governments are willing to just let a bunch of their big banks fail? No, they'll prop them up with liquidity, meaning the taxpayer will end up paying for a Greek default one way or the other.
Banks spreading will affect all nations banks, not just London. So why name London?
Because London doesn't have the means to save its banks.
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Neither do we.
"Wer Visionen hat, sollte zum Arzt gehen." - Helmut Schmidt
British banks are more secure (less likely to need saving) than almost any other - we've already seen that above. Plus British debt is lower than many other nations debt, so can borrow more. Plus we can (as a last resort) print more sterling.
So want to try again?
Lets get some facts in the way of Hazir's racism:
Greek debt Randblade, Greek debt. Only an idiot like you would think this is just about Greece.
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Greece is the only one so far being seriously talked about an inevitability of default. Only an idiot like you would think therefore this is all about London. Only an idiot like you would resort to using names like idiot when presented with reasonable facts.
Back to reality, it appears after months (?) of me saying default is inevitable in Greece and Hazir claiming it'll be prevented at least for years, that default will be a disaster etc ... it looks like some form of technical default will be agreed today.
Actually, Greece is not the only one. Ireland is a serious candidate too under any solution that inckudes a default. Anyway, have fun living in Lala land where you can insulate yourselve from the hard reality that this is your crisis too
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Ah yes, Ireland. Its a possibility, but nowhere near as utterly inevitable as Greece. Ireland defaulting would hit us much more, which is why we voluntarily made a bilateral agreement to support Ireland. Guess you forgot about that one?
This is a global crisis as well as a eurozone crisis, but we are infinitely better off than France. The idea as you claimed that "of course it would mean a mortal blow to London" is just utter bullshit though. I suppose if France collapsed that could drag us under too, but we've survived French collapses in the past
if current events continue as they are it won't even be as such in the land of doubles. It'll just be: a country Wallobrux named Belgium and a northern colony that is used as lebensraum and to pay the bills. bleh.
Looks like they are going to make a deal that takes a lot of the uncertaintly out. The value of the € against the lira jumped today form TL 2.32 to TL 2.39.
The 'special assistance' sounds a lot like the Greeks are going to have to hand over a lot of their fiscal autonomy to EU appointed people.
And this is how British 'money' thinks about the deal as per the Guardian website
In the City, Britain's banks led the risers, on relief that they may not face heavy eurozone losses. Barclays posted a 7.7% rise to 239.85p, followed by Lloyds Banking Group, up 5.9% at 47.56p.
Last edited by Hazir; 07-21-2011 at 06:04 PM.
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Of course there was a risk of losses, but not "the death of London". £14bn is chump change for us.
we do though.
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Moving back to reality:
One issue rarely addressed is Italy's woeful demographics. I do not see how Italy is going to turn around its growth-rate into something positive enough to escape from its debt mountain.Italy 'to default' but Spain may 'just' escape
Debt-laden Italy is likely to default, but Spain might just avoid it, according to the British think-tank, the Centre for Economics and Business Research.
With the countries weighed down by debt, the think tank modelled "good" and "bad" economic scenarios for both.
It found that Italy will not avoid default unless it sees an unlikely big jump in economic growth.
However, it said, "there is a real chance that Spain may avoid default".
Even though Italy has managed to run tight budgets, and has vowed to eliminate its deficit by 2014, the economy needs a significant boost in growth.
But its economy grew by just 0.1% in the first quarter of 2011 and further growth is expected to remain sluggish.
On Wednesday, Italian Prime Minister Silvio Berlusconi addressed parliament, saying the economy was "strong" and the nation's banks "solvent".
But many economists believe that the eurozone's third largest economy risks being engulfed in the debt crisis.
In a report published on Thursday, the CEBR calculated that Italy's debt would rise from 128% of annual output to 150% by 2017 if bond yields stay above the current 6% and growth remains stagnant.
"Even if the cost of borrowing goes back down to 4%, the growth rate is so anaemic that we see the debt-GDP ratio remaining at 123% in 2018," said Doug McWilliams, the CEBR's chief executive.
The conditions in Spain are better because its debt is much lower. Even under the "bad" scenario, Madrid's debt ratio would climb to no higher than 75% of national output.
"Fingers crossed but there is a real chance that Spain may avoid default and debt restructuring, unless it gets dragged down by contagion," Mr McWilliams said.
"Realistically, Italy is bound to default, but Spain may just get away without having to do so," he said.
If yields remain above 6%, that's a big if indeed. Given that they are already moving below 6 today (Spain a whisk above 6 now). And that's before the EFSF takes effect.
I also wonder if those 'demographics' for Italy take into account how many illegal immigrants there are in the country. Most of them work in the informal economy. Did you know you can get a half hour Thai massage on the beach in Italy for around €10?
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Should they? The "informal economy" isn't taxed, or really taxable, so it can't exactly be used to pay off government debt, can it?
Happy ending or legitimate?
"I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them."
"The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants."
-- Thomas Jefferson: American Founding Father, clairvoyant and seditious traitor.
Not not, but what if you give them residency and work permits?
Illegitimate, but no happy endings.Happy ending or legitimate?
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Well, if that happened, they'd be too stunned at the sight of herds of flying pigs blocking out the sun to contribute anything to the economy anyway.
The EU's even worse on immigrants than the US is, and Italy's not exactly known for welcoming foreigners, even during the best of times. The worse things get, the more immigrants get scapegoated and squeezed out. Can't have them filthy foreigners stealing jobs.
"I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them."
"The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants."
-- Thomas Jefferson: American Founding Father, clairvoyant and seditious traitor.
As an adult I know who lived 10 years in Italy described it: "Italy is a beautiful place. I look forward to moving to Cambodia though, as its people realize that their nation is a developing country. Italy is too, but refuses to acknowledge it."
Tomorrow is like an empty canvas that extends endlessly, what should I sketch on it?
Seems you don't know about the Club Med habit of every now and then declaring amnesties for illegals immigrants. Which then causes howling in the parts of Europe that these people actually want to move to.Well, if that happened, they'd be too stunned at the sight of herds of flying pigs blocking out the sun to contribute anything to the economy anyway.
The EU's even worse on immigrants than the US is, and Italy's not exactly known for welcoming foreigners, even during the best of times. The worse things get, the more immigrants get scapegoated and squeezed out. Can't have them filthy foreigners stealing jobs.
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I think that really depends on where in Italy you are, north of Rome is barely the same country as south of Rome.
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