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Laura

World Is Dangerously Exposed To European Default

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A couple of days old, but not seen it posted.

For anyone wondering why Europe’s leaders are so determined to avoid a restructuring of Greek sovereign debt, I recommend a remarkable piece of research published on Monday by Jacques Cailloux, the Royal Bank of Scotland’s chief European economist, and his colleagues. (Unfortunately, it seems not to be easily available on the internet, so I’m providing links to news stories that refer to the report.)

The RBS economists estimate that the total amount of debt issued by public and private sector institutions in Greece, Portugal and Spain that is held by financial institutions outside these three countries is roughly €2,000bn. This is a staggeringly large figure, equivalent to about 22 per cent of the eurozone’s gross domestic product. It is far higher than previous published estimates. It indicates that, if a Greek or Portuguese or Spanish debt default were allowed to take place, the global financial system could suffer terrible damage.

The €2,000bn estimate is based on data compiled by the Bank of International Settlements, the International Monetary Fund, the Organisation for Economic Co-operation and Development, and the World Bank. It differs from earlier estimates in that it includes not only foreign bank exposure to Greek, Portuguese and Spanish debt, but the exposures of other institutions such as insurance companies and pension funds.

What is the breakdown? Foreign foreign institutions are estimated to have held €338bn of Greek debt at the end of 2009 - equivalent to 142 per cent of Greek GDP. In Spain’s case, the figure is €1,500bn - also 142 per cent of GDP. For Portugal, the figure is €333bn, the equivalent of twice its GDP. The combined amount for the three countries is €2,171bn, but the RBS authors think the total exposure of foreign institutions has declined a little in the first five months of this year.

Senior moment #38, I forgot the link, & people don't believe me when I do that.

http://blogs.ft.com/brusselsblog/2010/05/world-is-dangerously-exposed-to-european-default-report-says/

Edited by Laura

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One of these?

Grotesque. No wonder the USA is finished <_< (has to be American?)

Some of us have (dated) taste :)

1959-alfa-romeo-veloce-spider.jpg

I stlll miss mine. Just don't ask how long ago it was.

Back to the excitement

Reserve managers can no longer regard the EUR as having the characteristics of its strongest constituent, the DEM. They are being forced to question the currencies that will make up the EUR long-term. In theory a EUR that only included core currencies could be strong, but the process of getting there by shedding weaker periphery currencies would probably lead to such virulent contagion that the system would collapse

http://ftalphaville.ft.com/blog/2010/05/27/244631/the-euros-annus-horriblis/

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Debt is the new wealth. Don't people geddit yet? :D

You might be joking, but with a debt-based monetary system (like we have in most parts of the world now) this is absolutely true. All money (apart from coins) is debt of someone else, without debt there would be no money in a debt-based monetary system.

In other words debt is required in order to have money in the economy.

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Grotesque. No wonder the USA is finished <_< (has to be American?)

Some of us have (dated) taste :)

http://jalopnik.com/298922/look-out-zimmer+-johnson-phantom-in-the-house

You really can't go wrong when you roll into Palm Springs in a Zimmer Golden Spirit; why, you could have several underage prostitutes chugging Dom Pérignon in the back and a loaded .45 sitting on the passenger seat and still get the key to the city. This '82 has a mere 4700 miles on the clock, so you know the luxury is still in full effect.

And you say this isn't classy?

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You might be joking, but with a debt-based monetary system (like we have in most parts of the world now) this is absolutely true. All money (apart from coins) is debt of someone else, without debt there would be no money in a debt-based monetary system.

In other words debt is required in order to have money in the economy.

Well money is just an IOU so this makes sense. To me at any rate.

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It's rather amusing that people think it's Germany that provides the 'strength' in the Eussro when it's their banks that are carrying all the debt that's going to be defaulted.

Haircut for Herman!

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  • 261 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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