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Eurozone On The Brink As Imbalances Spike Bonds

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http://www.bloomberg.com/news/2010-11-07/european-bond-tensions-underscored-by-periphery-growth-divide-euro-credit.html

European Bond Tensions Underscored by Periphery Growth Divide: Euro Credit
By Emma Ross-Thomas - Nov 8, 2010 12:17 PM GMT
Gross domestic product figures from Germany, Greece and Portugal may highlight Europe’s two-speed economy, driving up borrowing costs for so-called peripheral nations. The extra yield investors demand to hold Irish debt rather than German bunds surged to a record today, while Portugal’s spread is near a euro-era high.
The divergence poses a challenge for European Central Bank policy makers, whose desire to remove stimulus measures is complicated by the Federal Reserve’s decision to expand its bond-buying program to underpin the economy. Peripheral euro countries risk stricter central bank policies boosting the single currency’s value, undermining recoveries that are already sapped by deficit-cutting efforts.
“There are tough times ahead and monetary policy could have helped cushion that, but it’s not in a place to do so because it has to be right for the whole area,” said Nick Kounis, head of macro research at ABN Amro Bank in Amsterdam. “The periphery would be happy to have the Fed as their central bank at the moment.”
..../
The spread on Irish debt rose to a record 534 basis points today, while the extra yield on Portuguese bonds surged to 417 basis points, 10 basis points shy of its euro-era closing record. Spanish debt also approached its record of 221 basis points set in June at the height of the sovereign debt crisis.
:o

Euro starting to decline vs. $ and £. The imbalances were bound to tear the EZ apart when the first test of the single currency came. They patched things over a few month ago but the poisons are still hatching out--perhaps at an even faster rate because they weren't dealt with the first time but simply ignored.

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Central bank wars, a European sovereign debt crisis and the growing realisation that US bank balance sheets might not represent their actual position (see Bank of America).

Markets can usually deal with one crisis at a time. They struggle with two simultaneous crises. They will blow up if we get three simultaneous crisis.

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http://uk.finance.yahoo.com/news/progress-to-fix-european-debt-crisis-slows-u-s-official-reuters_molt-1de210bca2dc.html?x=0

.Progress to fix European debt crisis slows - U.S. official
12:33, Monday 8 November 2010
NEW DELHI (
Reuters
) - Europe's progress in resolving its sovereign debt crisis has eroded slightly due to domestic political resistance and worries over a debt restructuring proposal, a U.S. official said on Monday.
The official, speaking on condition of anonymity, said Germany's suggestion that a 440 billion euro (380.3 billion pound) European bailout fund be replaced with a debt restructuring mechanism, is being viewed by financial markets as raising the threat of default.
That has pushed up yield spreads for some countries on Europe's periphery, including Ireland.

Seems to be some form of excitement brewing in the EZ. How to they correct the imbalances when they have a single currency and a single IR policy?

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How does this fit in with your views on gold heading down Bear?

It has just broken through 1000 Eur/Oz and is sitting at 1001 Eur/Oz.

Please explain this anomaly, to clear up any confusion.

NOT A GOLD THREAD

Pleeaaaaaaaaaaaaaaaaaaaase try to keep OT.

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NOT A GOLD THREAD

Pleeaaaaaaaaaaaaaaaaaaaase try to keep OT.

Well that's a bit of a cop out Bear.

This article is related to the gold, as the spectre of euro sovereign debt default that is raises has caused the price of gold in euro's to rise. To ignore such an association means ignoring a fundamental truth in discussion of the posted topic. Bearing that in mind, how can you post articles like this (most of your articles are bullish for gold if you dig only marginally beneath the surface) yet maintain a fatalistically bearish stance on gold?

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Back in the Spring it seemed the failure of Greece was going to trigger another financial meltdown

But now Ireland and Portugal are on the brink the markets don't seem to care

So what's changed?

I've noticed this before. A couple of years ago there was fears that failure of the municpal bond insureres in America would bring everythng down, but AMBAC could be about to go bankrupt and this hasn't had any effect

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Gold thread? Can I have some weaved into a couple of shirts? ;)

Seriously, I have high hopes that Ireland will end up out of the Euro and starting all over again with a new Punt, at that point I may head over their to live. They, like the US, the UK and the other PIGS are doomed. Austerity is proving not to work just like print and stimulate didn't. The fundamental problem is debt, we have too damn much of it, accumulated through greed and stupidity during the doom years on the belief the financial ponzi scheme could never falter.

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Back in the Spring it seemed the failure of Greece was going to trigger another financial meltdown

But now Ireland and Portugal are on the brink the markets don't seem to care

So what's changed?

I've noticed this before. A couple of years ago there was fears that failure of the municpal bond insureres in America would bring everythng down, but AMBAC could be about to go bankrupt and this hasn't had any effect

whats changed?

the volume of "liquidity".

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The only thing to outperform gold is prime London Real Estate :lol:

Buy all the gold you want, you still wont be able to live in London

(unless youre on housing benefit)

Not sure of the exact meaning of this post, but taking it literally, I couldn't have afforded to out compete a bunch of Saudi Oil Sheiks and invest in London Real Estate, so looks like I chose the best investment with my limited resources :ph34r:

Also, I'm not looking to live in London, tis a filthy, overcrowded, polluted place. Most unpleasant. No, I'll be spending my profits on a nice detached house, preferably in small market town, within walking distance of the countryside, but only a few miles drive from a decent sized city. :D

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Austerity is proving not to work just like print and stimulate didn't. The fundamental problem is debt, we have too damn much of it, accumulated through greed and stupidity during the doom years on the belief the financial ponzi scheme could never falter.

Well said that man, well said.

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  • 245 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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