I M F Say E U Must Print To Save The Euro

[Realistbear]

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8182765/IMF-urges-EU-to-boost-500bn-bail-out-fund-to-stem-crisis.html

Financial Crisis

IMF urges EU to boost €500bn bail-out fund to stem crisis

The International Monetary Fund has called on the EU authorities to boost their rescue fund and step up bond purchases to insure against a fresh financial crisis in the eurozone periphery.

The US has already had QE2, the Japs have been doing it, the ECB has been doing it without anyone noticing and now its finally out in the open. It seems, and only seems, that the UK and the Nordic economies have escaped the fallout from the binge years.

Was Brown our saviour? Do we owe him an enormous apology? Our employment is the highest in the G8, our exports are pulling ahead of Germany, Sterling is roq solid, our bonds are at the top of all the ratings............................................oh, and house prices are proving to be resilient when you compare our tiny drops to the carnage elsewhere.

[interestrateripoff]

Clearly not enough monopoly money has been printed to save the day.

Perhaps Brown really did abolish boom / bust?

[Democorruptcy]

Sterling is roq solid

This year against

US -2.5% (printing to oblivion)

Yen -13.4%

Canada -7%

Australia - 11.5%

Swiss -8.2%

Euro +4.4% (up a brown waterway without means of propulsion)

In total since Oct 2008

US -11%

Yen -30.8%

Canada -15.7%

Australia - 28.8%

Swiss -22.9%

Euro -6.9%

Since summer 2007 I don't want to look.

[non frog]

.....

Was Brown our saviour? Do we owe him an enormous apology? ......

Yes.

[Georgia O'Keeffe]

This year against

US -2.5% (printing to oblivion)

Yen -13.4%

Canada -7%

Australia - 11.5%

Swiss -8.2%

Euro +4.4% (up a brown waterway without means of propulsion)

In total since Oct 2008

US -11%

Yen -30.8%

Canada -15.7%

Australia - 28.8%

Swiss -22.9%

Euro -6.9%

Since summer 2007 I don't want to look.

See rock solid like the man says ,

dont know about the other currencies but since then end of 06 its down 40% against the CHF, theres a houseprice and everything crash right there, the downside for the UK is theyve had that correction and the local imbalance on houseprices and other costs has hardly started to be addressed.

Edited December 6, 2010 by Tamara De Lempicka

[General Congreve]

Well, I think it's a little far fetched to say Sterling will be triumphant. As Redhat proves, it's been giving such a kicking in the last 3 years that it was hardly a good place to be invested. It may move upwards from here against the other currencies, for the reasons listed in the OP, but just because one currency is the best of a bad bunch, it isn't going to stop gold being the best bet, especially as one of the currencies currently getting served is the world's reserve currency.

Oh yeah, while I'm at it, gold broke the £900/Oz barrier this morning.

[DungBeetle]

Yes.

Oh dear... Liebour stooge in da house.

[Si1]

Darling move like. When this crisis kicked off Darling punted all the UK debts into the long term > 12yrs. With other countries still tapping short term lending it was inevitable and obvious to see that if credit is drying up best to secure it for the long term.

Likewise dont forget the top10 UK banks have 1.5 times more assets that the top10 US banks as pointed out by Mervyn King in Buttonwood (see tables 1 & 2) http://www.bankofeng...0/speech455.pdf and with Obama vetoeing HR3808 theres little chance of lenders getting to reposses in the US so more are off the hook and free from repossession now as we see with the growing trend of strategic mortgage defaults http://www.businessw...l-update3-.html so who will want to lend to anyone in the US any money if there is a reduced chance of getting it back? This will harm the dollar and its why I say unless the Euro zone goes for full fiscal control of the countries in the project unlikely imo, my money is no longer on Gold but Sterling but its going to be a choppy ride!

Darling is not actively hated by the tories, they differ from him in that he is pro-Big State, but he is not pro-deficit like Broon is, and he is not out actively to make people poorer. Anecdotally, Darling as chancellor stopped talking to Brown for periods such was his disgust at the turd he inherited from Brown. We owe Darling a debt of thanks for playing the political game so well to stay in as chancellor instead of Ed Balls usurping him in 2009.

[leicestersq]

Oh dear... Liebour stooge in da house.

The two things that Brown did which I thought were goodm were not entering the euro, and supporting the banks in 2008. The first decision was A+, the second a B-.

Looking more closely we see that Brown stayed out of the Euro to spite Tony Blair, so hardly an informed decision.

And as for the banking crisis, did anyone else notice that Brown disappeared during that time. Darling was always the front man, never Brown?

The theory is that he sort of cracked up then, which was a good thing because he couldnt interfere and it let those who knew what they were doing to get on with their jobs. I suspect he was still dazed from the disaster he caused with the Lloyds-HBOS merger.

I will say that the solution, bailing out the banks with taxpayers money, and no haircuts for depositors and bondholders, wasnt my preferred solution. But it sort of worked.

Mind you, anything that Brown was directly involved in, and did because he believed it to be right, was a disaster. All of it.

[50sQuiff]

Merv fired up the presses and printed on a grand scale before the doddery ECB or Helicopter could catch their breath. Whatever you say about him (and I believe he's a criminal), he's a wily old ******* that 'gets it'.

As a consequence we are more buoyant than our rivals. But unfortunately this has left us way behind the curve when it comes to liquidating bad debt and malinvestment. Our toxic banks are even bigger and the housing bubble hasn't burst yet. Even the prodigous printing and the expert jawboning from the Tories and BoE (we really are still Perfidious Albion) can't prevent us going down a second time. Then what?

Remember, Havenstein feared deflation and unemployment more than anything. Each time the solution was to print. When the international money markets destroyed the mark and the internal price structure finally started to break down, imports of food and energy ceased. The shit only hits the fan when printing stops working, and the country in question gets served the final denouement of hyperdeflation.

These boys are playing a dangerous game.

[indirectapproach]

Reading from the idiots guide page to the Great Depression, which it seems all our dear leaders are following to the letter, the absence of currency controls and Smoot Hawleyesque tarrifs may mean this one turns out less bad. Corporate earnings seem to be holding up well and I'm still not seeing Hooverville's.

[Executive Sadman]

Darling move like. When this crisis kicked off Darling punted all the UK debts into the long term > 12yrs. With other countries still tapping short term lending it was inevitable and obvious to see that if credit is drying up best to secure it for the long term.

Likewise dont forget the top10 UK banks have 1.5 times more assets that the top10 US banks as pointed out by Mervyn King in Buttonwood (see tables 1 & 2) http://www.bankofengland.co.uk/publications/speeches/2010/speech455.pdf and with Obama vetoeing HR3808 theres little chance of lenders getting to reposses in the US so more are off the hook and free from repossession now as we see with the growing trend of strategic mortgage defaults http://www.businessweek.com/news/2010-04-29/-strategic-mortgage-defaults-jump-to-12-of-total-update3-.html so who will want to lend to anyone in the US any money if there is a reduced chance of getting it back? This will harm the dollar and its why I say unless the Euro zone goes for full fiscal control of the countries in the project unlikely imo, my money is no longer on Gold but Sterling but its going to be a choppy ride!

I think RB was being sarcastic, except with the House prices bit.

Are exports certainly ARE NOT pulling ahead, despite money printing, we have record trade deficit levels.

[EmpiricalBear]

It wont burst like many hope either for one simple reason home "owners" will do all they can to keep that roof over their heads, this was obvious during the 90's recession and obvious now. Spending in all other sectors will go down which we are seeing with cars numbers down for the first since WW2 for example and house prices will go down as well but alot less quickly than seen abroad but the total transaction value will drop like a lead balloon though. I also think the banks will do everything they can to keep those repayments rolling in simply becuase its better than forcing a bankruptcy except in all but the most extreme cases becuase noone wins with a bankrupt consumer.

I agree with your posts, very insightful.

There is a very unlikely black swan risk, but it seems far remoter to me now than it did before. Couple where we have been (and I'm also a grudging Darling fan) with the fact that we are now on a new political part of the cycle that should lead to more growth and the UK is looking better than it did.

We are Thatchers Children and that means we have better labour flexibility than many competing economies. The still have to fully come to terms with globalisation and this may help the UK over the next ten years.

(I was amused to see that William Hague described himself Cameron and Osborne as Thatchers Children in one of the wikileaked cables... though we may have been using it in a different sense.)

[needsleep]

I think Brown/Darling did ok. They calmed the markets. They took us out of recession. And we have a platform for growth. I just get that uneasy feeling that they kicked the can along the road a little. They got that feeling too which is why they were planning for 20% cuts if they won the election. Maybe not cuts as swift and deep as the LibsCons have talked about but pretty savage all the same. But at the moment it's like walking a tightrope - Osbourne was wobbling when he over-egged the impact of the Greek crisis on the UK but thankfully he seems to have watered down that rhetoric. Ultimately we've got pretty much the same as we would have had with Labour - a period of talking about and planning cuts during 2010, followed by the real business in 2011 onwards. Whether he likes to admit it or not the path Osborne has trodden is much the same as whta Darling would have done.

[aa3]

Gordon Brown, Alistair Darling and Mervyn King were exactly right with their bold move to print so large. Europe is finding out the hard way, after the Germans forced their plan of brutal austerity in the face of debt crisis on several nations.

Imo Europe should print large and then put in place new regulations across the EU so this kind of debt bubble cannot happen again.

[Realistbear]

Jan Strupczewski, Kat Streptacoccus 12:25, Monday 6 December 2010

BRUSSELS (

Reuters

) - Euro (MCU - news) zone finance ministers meeting on Monday face pressure to increase the size of a 750 billion euro (636 billion pound) safety net for debt-stricken members in order to halt contagion in the single currency bloc.

International Monetary Fund chief Dominique Strauss-Kahn will call on ministers to boost the rescue pool and urge the European Central Bank (ECB) to step up its purchases of bonds to stem the crisis, according to an IMF (Berlin: MXG1.BE - news) report obtained by Reuters.

All that warm fuzzy news for the EU last week seems to be evaporating, again.

[MinceBalls]

Gordon Brown, Alistair Darling and Mervyn King were exactly right with their bold move to print so large. Europe is finding out the hard way, after the Germans forced their plan of brutal austerity in the face of debt crisis on several nations.

Imo Europe should print large and then put in place new regulations across the EU so this kind of debt bubble cannot happen again.

The thing is, didn't the UK do OK (early on let's say) because of what you have stated (that the EU has been so slow to catch-on). If the EU had acted earlier surely the UK wouldn't have done OK?

Isn't EU mass printing going to make it harder for the UK as the EU will essentially be weakening it's currency and make the £ less competitive agast it?

[Realistbear]

http://uk.finance.yahoo.com/news/Merkel-rebuffs-IMF-call-raise-reuters_molt-2207979273.html?x=0

Jan Streptococcus, On Monday 6 December 2010, 15:01

BRUSSELS (

Reuters

) - Euro (MCU - news) zone finance ministers meeting on Monday faced IMF (Berlin: MXG1.BE - news) pressure to increase the size of a 750 billion euro (641 billion pounds) safety net for debt-stricken members to halt contagion in the single currency bloc.

But EU paymaster Germany firmly rejected any such move and also dismissed a call by two veteran finance ministers for joint euro bonds guaranteed by the whole euro zone as he threatened to have them all shot in the morning.

Looks like Germany does not want more bond purchases as they will probably end up having to cover the PIIGSFHB......when the troubles return.

Edited December 6, 2010 by Realistbear

[dissident junk]

Darling is not actively hated by the tories, they differ from him in that he is pro-Big State, but he is not pro-deficit like Broon is, and he is not out actively to make people poorer. Anecdotally, Darling as chancellor stopped talking to Brown for periods such was his disgust at the turd he inherited from Brown. We owe Darling a debt of thanks for playing the political game so well to stay in as chancellor instead of Ed Balls usurping him in 2009.

Darling was actually a pretty good chancellor, considering ... but then Labour have always killed off their best. Anyone who looks like they can do their job properly and has a decent brain gets kicked out or exiled.