Jump to content
House Price Crash Forum
Realistbear

Breaking: Merkel Tells Piigs What They Can Do With Themselves

Recommended Posts

http://uk.finance.yahoo.com/news/angela-merkel-consigns-ireland-portugal-and-spain-to-their-fate-tele-1b53d6e25110.html?x=0

Angela Merkel consigns Ireland, Portugal and Spain to their fate
Ambrose Evans-Pritchard, 17:37, Sunday 31 October 2010
Germany has had enough. Any eurozone state that spends its way into a debt crisis or cannot adapt to a monetary union set for Northern rhythms will face orderly bankruptcy.

This is a big step for Germany--it may be the signal that they have had enough supporting the PIIGS and are ready to go it alone.

Sovereign debt crisis contained? I don't think so.

Share this post


Link to post
Share on other sites

http://uk.finance.yahoo.com/news/angela-merkel-consigns-ireland-portugal-and-spain-to-their-fate-tele-1b53d6e25110.html?x=0

Angela Merkel consigns Ireland, Portugal and Spain to their fate
Ambrose Evans-Pritchard, 17:37, Sunday 31 October 2010
Germany has had enough. Any eurozone state that
spends its way into a debt crisis
or cannot adapt to a monetary union set for Northern rhythms
will face orderly bankruptcy
.

This is a big step for Germany--it may be the signal that they have had enough supporting the PIIGS and are ready to go it alone.

Sovereign debt crisis contained? I don't think so.

Fair enough.

Just a much bigger version of the low paid workers being taxed to support the career none working scroungers (who have a much bigger income!).

I hope the worm is turning, the low earners have had enough now, all the basic needs are costing more (fuel, gas, food, insurance etc.) and wages going backwards.

HPC is not the biggest issue now, survival on a low income is now quite worrying.

Will 'call me Dave' now follow Merkel's example and slim that foreign aid budget? spose not.

Share this post


Link to post
Share on other sites

We must keep in mind the feelings of our people, who have a justified desire to see that private investors are also on the hook, and not just taxpayers, said German Chancellor Angela Merkel.

Or in the words of Bundesbank chief Axel Weber: Next time there is a problem, (bondholders) should be part of the solution rather than part of the problem. So far the only ones who have paid for the solution are the taxpayers.

Just like it should have been with the banks.

Share this post


Link to post
Share on other sites

This is entirely predicable, as is a 2-tier Euro, with a core of countries who are more or less in step continuing to use the Euro, and those with more entrenched economic problems dropping out into something else.

Share this post


Link to post
Share on other sites

http://uk.finance.yahoo.com/news/angela-merkel-consigns-ireland-portugal-and-spain-to-their-fate-tele-1b53d6e25110.html?x=0

Angela Merkel consigns Ireland, Portugal and Spain to their fate
Ambrose Evans-Pritchard, 17:37, Sunday 31 October 2010
Germany has had enough. Any eurozone state that spends its way into a debt crisis or cannot adapt to a monetary union set for Northern rhythms will face orderly bankruptcy.

This is a big step for Germany--it may be the signal that they have had enough supporting the PIIGS and are ready to go it alone.

Sovereign debt crisis contained? I don't think so.

Looks like Germany is raising the drawbridge. They've obviously had a chat with Deustche Bank and agreed a deal so the coming defaults won't take them under. The French Banks are going to be in the sh1t big time, before you can say so much as Greek default.

Should imagine the level of sovereign debt is high enough between the PIIGS for this to cause a major kick off globally :)

Edited by General Congreve

Share this post


Link to post
Share on other sites

The way i read it means she is not talking about the current crisis, she is referring to the inevitable(!) future ones:

'Or in the words of Bundesbank chief Axel Weber: Next time there is a problem, (bondholders) should be part of the solution rather than part of the problem. So far the only ones who have paid for the solution are the taxpayers.'

So no need to get excited about this i'm afraid.

Share this post


Link to post
Share on other sites

It isn’t what they say, it is what they do.

I have just returned home to Devon after a road trip to Southern Spain. The scale of construction of new roads/bridges/tunnels there is staggering, it makes the UK look, frankly, third world.

This work is funded by the EU, Spain certainly can’t afford it, and as Germany is the only member of the EU to be making any real (?) progress I guess that they must be content to continue doing so.

Share this post


Link to post
Share on other sites

There is little that these nations can in the short-run as EMU members. They cannot offset fiscal tightening with full monetary stimulus or a weaker exchange rate as Britain can. All they do can is soldier on, sell family silver to the Chinese and Gulf Arabs, beg the ECB to join the currency war to bring down the euro, and pray that the fragile global recover does not sputter out

Excuse me but isn't our weaker exchange rate resulting in us selling off the family silver?

Share this post


Link to post
Share on other sites

The way i read it means she is not talking about the current crisis, she is referring to the inevitable(!) future ones:

'Or in the words of Bundesbank chief Axel Weber: Next time there is a problem, (bondholders) should be part of the solution rather than part of the problem. So far the only ones who have paid for the solution are the taxpayers.'

So no need to get excited about this i'm afraid.

It affects them immediately. Why? Because Germany has just withdrawn the implicit guarantee that Germany would pay for the PIIGS if needed. This meant that as the article states the Greece in 2007 was borrowing at .2% above the German bund. This will never happen again. PIG borrowing will now be multiple %tage points aboue the bund in the region of 6.5 to 11%. All of these countries have huge refinancing to do this year and next, this is issuing new debt to pay off older debt, the old debt is at 4% the new will be more expensive and this is even if they can get the issue away.

If they can not get the new issue away then they have to default on the old debt because they do not have the cash to pay back the holders.

Even if they can get the debt away, they may decide that the interest rate is so penal that default is the better option.

You may not get excited but Prime Minsters, CoE and central bank governors in the PIIGS just had heart attacks. They are FUBARED and worst of all they have been shafted by there so called Euro collegues.

Edited by ralphmalph

Share this post


Link to post
Share on other sites

RB - please read the article you are quoting. Where does it say anything like your title ? Here is a direct quote from what AEP actually said.

Chancellor Merkel is ultimately correct. A mechanism for sovereign defaults is entirely healthy. Had it been in place long ago, EMU would have been stronger. The proper timing for this was at the Maastricht Treaty, or Amsterdam, or at the latest Nice (Milan: NICE.MI - news) , but in those days the EU elites were still arrogantly dismissive about the implications of a currency union

You really should ask yourself why you are so quick to misrepresent or lie.

The whole point of the article is actually very gratifying for those who don't want to see taxpayers being milked by bondholders. The likes of Ireland are being sent a clear message that they are facing bankruptcy and should atone for their grotesque behaviors. Of course bondholders getting a haircut will expect MUCH higher rates of return on new equities and that means more downward pressure on housing to a point where it reaches a sensible equilibrium between risk and reward. You should also be asying thank god for Germany (which has an 18 year high in employment!) They, and several other quite EU hero nations, will keep the jackals on Wall St. at bay using the trillion euro (950bln) central bank fund. This fund will ensure governments are not raped by Wall St. which is conspiring against the rest of the world in a desperate attempt to keep the USA afloat and the US banking system from collapsing.

Ein Volk, ein Reich, ein Merkin

Game over.

Share this post


Link to post
Share on other sites

The whole point of the article is actually very gratifying for those who don't want to see taxpayers being milked by bondholders. The likes of Ireland are being sent a clear message that they are facing bankruptcy and should atone for their grotesque behaviors.

Ireland's 'grotesque behaviour' of having its interest rates set artificially low by Germans, you mean?

Share this post


Link to post
Share on other sites

absolute garbage - the global base rate is determined by the Fed. Go look at a graph comparing the US base rate and the ECBs. The ECB has had to struggle against Fed policy for 15 years. I can recall several meetings where europe was taunted by Greenspan and co. for having set rates too high and being too cautious about growth targets. The USA is an expert manipulator and has dragged the world into chaos via wall street - blaming Germany is plain ignorant. As for the boom in prices in ireland - when did you see a boom in prices in Germany and France and Belgium etc.

Ireland's 'grotesque behaviour' of having its interest rates set artificially low by Germans, you mean?

Edited by bpw

Share this post


Link to post
Share on other sites

absolute garbage - the global base rate is determined by the Fed. Go look at a graph comparing the US base rate and the ECBs. The ECB has had to struggle against Fed policy for 15 years. I can recall several meetings where europe was taunted by Greenspan and co. for having set rates too high and being too cautious about growth targets. The USA is an expert manipulator and has dragged the world into chaos via wall street - blaming Germany is plain ignorant. As for the boom in prices in ireland - when did you see a boom in prices in Germany and France and Belgium etc.

Id have thought the rates were in reality set by buyers...oh..they are.

Share this post


Link to post
Share on other sites

It affects them immediately. Why? Because Germany has just withdrawn the implicit guarantee that Germany would pay for the PIIGS if needed. This meant that as the article states the Greece in 2007 was borrowing at .2% above the German bund. This will never happen again. PIG borrowing will now be multiple %tage points aboue the bund in the region of 6.5 to 11%. All of these countries have huge refinancing to do this year and next, this is issuing new debt to pay off older debt, the old debt is at 4% the new will be more expensive and this is even if they can get the issue away.

If they can not get the new issue away then they have to default on the old debt because they do not have the cash to pay back the holders.

Even if they can get the debt away, they may decide that the interest rate is so penal that default is the better option.

You may not get excited but Prime Minsters, CoE and central bank governors in the PIIGS just had heart attacks. They are FUBARED and worst of all they have been shafted by there so called Euro collegues.

That is exactly my reading of it

But I still can't believe this is what it can mean because it guarantees default in the near future. If so why would the PIIGS agree to it?

Anyone think it's not really so drastic?

Are there any implications for HPC here. e.g. would default lead to a further contraction in credit generally?

Edited by oldsport

Share this post


Link to post
Share on other sites

absolute garbage - the global base rate is determined by the Fed. Go look at a graph comparing the US base rate and the ECBs. The ECB has had to struggle against Fed policy for 15 years. I can recall several meetings where europe was taunted by Greenspan and co. for having set rates too high and being too cautious about growth targets. The USA is an expert manipulator and has dragged the world into chaos via wall street - blaming Germany is plain ignorant. As for the boom in prices in ireland - when did you see a boom in prices in Germany and France and Belgium etc.

The US has pursued the quick easy fix for decades, structurally it's in a very weak position however it's one big asset is that it's the global reserve currency and major commodities are traded in it. Moving away from that is going to cause massive short term problems and imbalances.

Share this post


Link to post
Share on other sites

That is exactly my reading of it

But I still can't believe this is what it can mean because it guarantees default in the near future. If so why would the PIIGS agree to it?

Anyone think it's not really so drastic?

Are there any implications for HPC here. e.g. would default lead to a further contraction in credit generally?

the PIIGS aren't that big a block surely? if they can't rack up debt the same in the future then that seems an effective market solution to them, plus they benefit from bankruptcy, which does sound like a solution to extreme debt cases

It might make domestic lending more conservative against risk, within the UK (my unrpofessional guess), and also add weight to the government's political strength to continue cutting the public sector, if not help the econopmy directly due to a temporary shock from the defaulting event of the PIIGS.

But overall, if the shocks are handled, this sounds good to me????

Share this post


Link to post
Share on other sites

http://market-ticker.org/akcs-www?post=170820

Local banks have stepped into the breach, borrowing cheaply from the ECB to buy their own state debt at higher yields in a `carry trade’ that concentrates risk. These four countries account for the lion’s share of the €448bn in ECB funding for banks (Spain €98bn, Greece €94bn). Frankfurt is propping up this unstable edifice. Mr Trichet may well fret.

There's nothing like a Carry Trade within one's own borders. Oh wait - we're doing that too, aren't we? Uh, Primary Dealers borrowing from The Fed at 1/4% and then buying our bond issues at 2.5 or 3.5%. Yeah, that kinda looks like a carry too, doesn't it? And it makes for an interesting discussion as to exactly how and when one can unwind said "extremely low rates for an extended period" language without detonating all the banks instantly, doesn't it?

Hmmm.......

Interesting comment from Denniger on the AEP article.

We certainly appear to be in the MAD scenario.

Share this post


Link to post
Share on other sites

the PIIGS aren't that big a block surely?

Isn't much of their debt owned by French, German, British banks (I think we have £10bn of Greek debt) ? Therefore that'd have a knock-on effect here.

Share this post


Link to post
Share on other sites

the PIIGS aren't that big a block surely? if they can't rack up debt the same in the future then that seems an effective market solution to them, plus they benefit from bankruptcy, which does sound like a solution to extreme debt cases

It might make domestic lending more conservative against risk, within the UK (my unrpofessional guess), and also add weight to the government's political strength to continue cutting the public sector, if not help the econopmy directly due to a temporary shock from the defaulting event of the PIIGS.

But overall, if the shocks are handled, this sounds good to me????

I've remembered now that AEP has always argued that it all depends on Spain and that if it's just Greece, Ireland and Portugal then the fallout won't be so bad.

Share this post


Link to post
Share on other sites

absolute garbage - the global base rate is determined by the Fed.

So we might as well get rid of the ECB then?

Even if you were right, that would simply mean that Ireland's interest rates were being set by Germans based on numbers from the other side of the Atlantic, so the Irish still haven't done anything other than you'd expect when an outside agency sets their interest rates to artificially low levels.

The Germans just don't want to take the blame for ******ing the Irish economy through the Euro.

Share this post


Link to post
Share on other sites

I've remembered now that AEP has always argued that it all depends on Spain and that if it's just Greece, Ireland and Portugal then the fallout won't be so bad.

ahhh. Spain. now that gets scarier.

Share this post


Link to post
Share on other sites

ahhh. Spain. now that gets scarier.

Spain maybe safe their net debt is not too high and the deficit is 6% I think. Unemployment is another matter and they may decide that this is too high a price to pay and they only way they can compete economically with Germany in the future is to be outside the Eurozone, but do it in a controlled manner.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 259 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.