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Euro Pressure

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Jan. 16 (Bloomberg) -- European Central Bank President Jean-Claude Trichet’s vision of economies converging behind the shield of a shared currency may be unraveling.

The gap between the interest rates Spain, Italy, Greece and Portugal must pay investors to borrow for 10 years and the rate charged to Germany has ballooned to the widest since before they joined the euro. The difference may grow further as Europe’s worst recession since World War II hurts budgets and credit ratings across the region.

Diverging bond yields hurt Trichet’s argument that the ECB’s inflation-fighting mandate ushered in an era of stability for nations that once suffered rampant price growth. They also make it tougher for the ECB, which cut its key rate to a record yesterday, to set one benchmark for all 16 euro nations. That may delay recovery as governments try to fund stimulus plans.

“It will act as an additional braking mechanism on these economies,” said Julian Callow, chief European economist at Barclays Capital in London. “For the ECB it makes it harder to determine the future evolution of the economy.”

Well lets face it, it's not just the Euro that has problems.

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Its the EU, they will sort it out by wasteing money and f*ckin it up!

Its what they do!

erm no. thats what WE do.

the dont have a personal debt bubble or housing bubble. and their exports consist of goods,

not failed financial pyramids based on little else but government IOUs.

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If the Euro is a single currency then each Nation has the ability to inflate the currency used in other States... Why not give everyone in your country €10k financed by Government debt?

Would the ECB let you fail, if so what about the debt of all European countries? Where is the disincentive against National borrowing unless the ECB threaten to revoke their guarantee?

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erm no. thats what WE do.

the dont have a personal debt bubble or housing bubble. and their exports consist of goods,

not failed financial pyramids based on little else but government IOUs.

Except in Ireland and Spain.

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erm no. thats what WE do.

the dont have a personal debt bubble or housing bubble. and their exports consist of goods,

not failed financial pyramids based on little else but government IOUs.

You do realise that the Euro consists of more than just Germany ? Which is incidentally in a spot of trouble too.

Ever heard of Ireland, Spain or Italy..... :rolleyes:

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You do realise that the Euro consists of more than just Germany ? Which is incidentally in a spot of trouble too.

Ever heard of Ireland, Spain or Italy..... :rolleyes:

Italy too?... didnt know that. ciao.

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Italy too?... didnt know that. ciao.

I think Italy have the highest insurance default rating of any country in the Euro ? Even more than Ireland.. :o

Although these do change all the time so I may be wrong.

I think they should change PIGS to PIGSI. Don't want the Irish to feel left out. In fact with Germany looking a little ******ed as well we could go for PIGGSI.

I can see this name getting larger by the month. Scary.... :ph34r:

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These are old figures 2004/2005

The situation has got a lot worse far quicker in some countries. Ireland must be somewhere near 200%, UK 170%+.

http://curiouscapitalist.blogs.time.com/20...the_only_peopl/

Household debt as a percentage of disposable income

Denmark 260%

Netherlands 246%

New Zealand 181%

Australia 173%

United Kingdom 159%

Ireland 141%

United States 135%

Sweden 134%

Japan 132%

Canada 126%

Germany 107%

Spain 107%

Finland 89%

France 89%

Italy 59%

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I think Italy have the highest insurance default rating of any country in the Euro ? Even more than Ireland.. :o

Although these do change all the time so I may be wrong.

I think they should change PIGS to PIGSI. Don't want the Irish to feel left out. In fact with Germany looking a little ******ed as well we could go for PIGGSI.

I can see this name getting larger by the month. Scary.... :ph34r:

The correct acronym was actually PIIGS, to include Ireland. I can see how one of the I's got dropped in pronunciation. Earliest reference I can find is the FT using it in Feb 2008.

However, it's also book publishing software, stands for Publisher's Invoice & Information Generating System. Compatible with windows apparently.

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These are old figures 2004/2005

The situation has got a lot worse far quicker in some countries. Ireland must be somewhere near 200%, UK 170%+.

http://curiouscapitalist.blogs.time.com/20...the_only_peopl/

Household debt as a percentage of disposable income

Denmark 260%

Netherlands 246%

New Zealand 181%

Australia 173%

United Kingdom 159%

Ireland 141%

United States 135%

Sweden 134%

Japan 132%

Canada 126%

Germany 107%

Spain 107%

Finland 89%

France 89%

Italy 59%

Does this percentage bear any relation to the degree of pain a country will experience in the coming collapse. If so, does it affect everybody in the country equally. What if your personal household debt is say ZERO but you live in a country with a high percentage. Or perhaps your household debt is 500% but you live in Italy. Any ideas.

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Excellent find, dazednconfused.

That last debate has received a fresh airing among those who question whether the single currency is ultimately sustainable without a common fiscal policy.

Quite.

End of days for nationhood, or end of days for the Euro.

Choose.

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Actually the really ugly thing about all this is that in addition to diverging spreads, the Eurozone has another structural problem (discussed here) - do you think that its more competative member states are just going idly sit on their thumbs while demand for high-value-add goods downshifts?

Or do you consider it likely that they will retool and continue to export excess capacity, crushing those below?

I know which of the two I'd gamble on.

Thomas Mayer, chief European economist at Deutsche Bank AG, said the diverging yields are a “warning shot” to governments to improve competitiveness through restraining costs or have investors impose discipline on them by choking off capital just when they need it most.

“You get this if you enter a really bad recession,” he said. “It’s obviously a very harsh medicine but you could say the market is dishing out this medicine.”

... except it isn't working.

The Eurozone requires capital to become more expensive to its net-surplus nations if it is to stand a chance of remaining as a Union (rather than an Empire or Federation), and not cheaper.

Edited by ParticleMan

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Actually the really ugly thing about all this is that in addition to diverging spreads, the Eurozone has another structural problem (discussed here) - do you think that its more competative member states are just going idly sit on their thumbs while demand for high-value-add goods downshifts?

Or do you consider it likely that they will retool and continue to export excess capacity, crushing those below?

I know which of the two I'd gamble on.

That's fine by me. I could do with working in a well run factory with some decent managers, as opposed to all the Dilbertesque ******** we have up to now.

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Guest absolutezero
The correct acronym was actually PIIGS, to include Ireland. I can see how one of the I's got dropped in pronunciation. Earliest reference I can find is the FT using it in Feb 2008.

However, it's also book publishing software, stands for Publisher's Invoice & Information Generating System. Compatible with windows apparently.

PIIGS would be better for pronunciation.

Peegs. Sounds like something a Spaniard would say. You Eeengleesh Peeg!

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PIIGS would be better for pronunciation.

Peegs. Sounds like something a Spaniard would say. You Eeengleesh Peeg!

This has already been used for a while......

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Does this percentage bear any relation to the degree of pain a country will experience in the coming collapse. If so, does it affect everybody in the country equally. What if your personal household debt is say ZERO but you live in a country with a high percentage. Or perhaps your household debt is 500% but you live in Italy. Any ideas.

The ideal is to have savings where others have debt (so you can buy their distressed assets) UNLESS the government steals your savings to pay their debts.

Zero debt in a highly-indebted country will not be comfortable because demand will collapse meaning you might well lose your job. It would still better than being one of the debtors though ... as long as you can avoid joining them.

If you're deeply in debt then it's best to be amongst others who are NOT in debt, because they can provide a market into which you can liquidate your assets, and where you can sell your labour to re-pay debt (and if you're lucky and/or big enough not to fail, their savings will bail you and your distressed assets out).

Basically, having savings available in the system has to be a good thing. The problem is that so many savings have been exported.

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End of days for nationhood, or end of days for the Euro.

Choose.

I can't see a common fiscal policy being acceptable to the core countries;it has to be about more than taxes, it's got to include welfare and benefits too. German taxpayers funding PIIGS unemployed? Could be interesting; I might revise my view on UK euromembership if that were to occur :lol:

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PIIGS would be better for pronunciation.

Peegs. Sounds like something a Spaniard would say. You Eeengleesh Peeg!

Surely it would be easier to say PIGIS? Or, if you add Estonia you could have PIGIES! :lol:

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[newbie-type question]

If it's all the same currency (Euro), backed by the ECB, then why not borrow from the Germans and lend to the PIIGS - taking the 2% spread?

[be gentle with me! :) ]

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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