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Italian And Spanish Bond Yields Soared To Post-Emu Highs

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http://www.telegraph.co.uk/finance/globalbusiness/8631219/German-Nein-leaves-Italy-and-Spain-in-turmoil.html

Chancellor Angela Merkel called for more "frugality" in Italy, sticking to her script that Rome can solve its woes with an austerity budget. Her finance minister Wolfgang Schäuble said any boost to the EU's €500bn (£440bn) bail-out machinery was "out of the question".

Mr Schäuble denied reports that Berlin was ready to empower the fund to purchase Spanish and Italian bonds pre-emptively on the open market, a move seen by experts as vital to halt dangerous contagion to the larger economies.

The market's verdict on EU foot-dragging was instant and brutal. Yields on 10-year Spanish bonds smashed through the 6pc barrier for the first time since 1997, made worse by warnings from the Castilla-La Mancha region that its deficit had become "extremely serious".

Italian yields jumped 44 points 5.7pc, a level that starts to threaten the sustainability of the country's finances.

Austerity has worked well in Greece.

So we can expect the Germans to rubber stamp an even bigger bailout fund shortly then? We have an official denial about the fund being expanded.

It appears that the market dislocation of the past decade caused by the borrowing on the back of Germany's credit rating is over.

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This could be the big one, with the UK and US next in line.

Once people lose confidence in the govts, the IRs will soar. (except for the EUR ... which has to split).

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This could be the big one, with the UK and US next in line.

Once people lose confidence in the govts, the IRs will soar. (except for the EUR ... which has to split).

Gilts on next to naff all with all others on the up rapidly - agree highly unlikely.

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About the only thing the EU can do is have the ECB start buying Italian and Spanish bonds too. It will have a much bigger impact than what we've seen so far.. because Greece, Portugal and Ireland together only have about 25 million people.

But Italy has 60 million and Spain 46 million. What is interesting is how fast Italy is breaking down.. a week ago the talk really wasn't about Italy at all.

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About the only thing the EU can do is have the ECB start buying Italian and Spanish bonds too. It will have a much bigger impact than what we've seen so far.. because Greece, Portugal and Ireland together only have about 25 million people.

But Italy has 60 million and Spain 46 million. What is interesting is how fast Italy is breaking down.. a week ago the talk really wasn't about Italy at all.

That's getting to near half the Eurozone by population..

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Barely a third actually but hey, don't let the facts get in the way.

data here

But a third is actually "getting on for half", is it not? "nearly a third" may be a little more accurate, but if you wanted to be pedantic, why not say it's 98/324'ths?

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Barely a third actually but hey, don't let the facts get in the way.

data here

So Eurozone population = 330 million

Spain = 47 mil

Italy = 60 mil

Greece, Ireland, Portugal = 26.4mil

= 133 million (40%)

Which is significantly more than a third, but yes it is less than half (I was remembering 300mil at eurozone population). Still.. having 60% of the Eurozone bailing out the other 40% is starting to look a bit unsustainable. Especially when that 60% is not exactly problem-free.

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So Eurozone population = 330 million

Spain = 47 mil

Italy = 60 mil

Greece, Ireland, Portugal = 26.4mil

= 133 million (40%)

Which is significantly more than a third, but yes it is less than half (I was remembering 300mil at eurozone population). Still.. having 60% of the Eurozone bailing out the other 40% is starting to look a bit unsustainable. Especially when that 60% is not exactly problem-free.

Maybe add Belgium to the list - this certainly affecting more than just the main protagonists.

http://www.fxstreet.com/fundamental/analysis-reports/sunrise-market-commentary/2011/07/12/

The spreads of the bailout three increased by respectively 61 bps for Portugal (1071 bps), 45 bps for Ireland (1053 bps) and 31 bps for Greece (1435 bps). In the semi-core, the moves were more shocking: the Italian spread added 57 bps (301 bps), the Spanish spread 51 bps (336 bps) and the Belgian spread 34 bps (162 bps). Finally, the growing concerns about the Euro zone’s future were also affected core spreads: the French spread increased 11 bps (69 bps), the Austrian spread 9 bps (67 bps) and the Dutch (45 bps) and Finnish (43 bps) increased by 7 bps. With the exception of Greece and the non-core countries (excluding France), all 10-year yield spreads reached euro life time highs

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About the only thing the EU can do is have the ECB start buying Italian and Spanish bonds too. It will have a much bigger impact than what we've seen so far.. because Greece, Portugal and Ireland together only have about 25 million people.

But Italy has 60 million and Spain 46 million. What is interesting is how fast Italy is breaking down.. a week ago the talk really wasn't about Italy at all.

they could tell the truth.

Tell bankers that those bonuses they earned on Greek and other PIIGS bonds are A:..needing to be clawed back, and B: the capital is lost.

Then let the perfect, risk free shadow banking system earn its keep with its risk free CDS payments system to cover the losses.

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About the only thing the EU can do is have the ECB start buying Italian and Spanish bonds too. It will have a much bigger impact than what we've seen so far.. because Greece, Portugal and Ireland together only have about 25 million people.

But Italy has 60 million and Spain 46 million. What is interesting is how fast Italy is breaking down.. a week ago the talk really wasn't about Italy at all.

Italy was talked about on here last summer (and subsequently Durch started a thread on it).

It's debt market is 3rd largest in the world after US and Japan - E1.15tn.

http://www.bbc.co.uk/news/14124584

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That must explain those horses' heads I kept finding in my bed.

Actually I think the title belongs to you or correction, RK, I just made a joke about it coming to fruition:

http://www.housepric...pic=155087&st=0

Correction 'Correction'.

I'm sure we can claim collective responsibility :D

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http://www.telegraph.co.uk/finance/globalbusiness/8631219/German-Nein-leaves-Italy-and-Spain-in-turmoil.html

Austerity has worked well in Greece.

So we can expect the Germans to rubber stamp an even bigger bailout fund shortly then? We have an official denial about the fund being expanded.

It appears that the market dislocation of the past decade caused by the borrowing on the back of Germany's credit rating is over.

The total failure of Greek austerity was revealed in the 1st half budget deficit figures on Monday. Ironically if Italy cuts too hard and fast it will do a lot more harm than good. Fundamentals are already going south fast, massive austerity you may as well bail them out now.

Italy needs inflation and devaluation to survive. There is a reason the lira had a large amount of 0’s to other currencies.

Italy should abandon the € immediately. The budget is not in to bad a state, they have a real economy, in the north at least. Forcefully convert bonds back to Lira, devaluation v the euro would be limited as it would plunge also.

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The total failure of Greek austerity was revealed in the 1st half budget deficit figures on Monday. Ironically if Italy cuts too hard and fast it will do a lot more harm than good. Fundamentals are already going south fast, massive austerity you may as well bail them out now.

Italy needs inflation and devaluation to survive. There is a reason the lira had a large amount of 0’s to other currencies.

Italy should abandon the € immediately. The budget is not in to bad a state, they have a real economy, in the north at least. Forcefully convert bonds back to Lira, devaluation v the euro would be limited as it would plunge also.

Italy like Greece should get on with it and default. Painful yes, but the only option.

They cannot grow their way out of this mess.

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http://www.zerohedge.com/article/willem-buiter-says-if-ecb-does-not-intervene-thursdays-italian-bond-auction-it-will-likely-f

Willem Buiter, Citigroup's chief economist and former BOE policy maker, told reporters in London today that "the ECB will intervene on whatever scale is necessary to allow Italy to conduct its auction on Thursday. If the ECB doesn’t come in, the Italian bond auction is likely to fail. What we’re going to have is the ECB are going to be doing the heavy lifting." To anyone who watched the sharp move in Italian sovereigns, so reminiscent of central bank FX intervention overnight, Buiter's conclusion is all too obvious. As we reported, there were extensive rumors, and certainly validated by trading activity, that either the ECB or the PBOC or both, intervened in the Italian bond market to make sure today's Bill auction priced, which it did, but absent the reinforcement of the central banks could have very likely failed. What is amusing is that it was just last week that reporters were querying Trichet why the ECB's SMP bond purchasing operation had been all but abandoned. Well, here's your answer: JCT was simply preserving his dry powder for all the upcoming contagion casualties, such as Italy first, then everyone else.

Thursday is going to be very interesting.

The ECB to guarantee to buy this straight from the banks that buy?

Wouldn't want to overtly look like they are monetizing debt.

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http://www.zerohedge.com/article/willem-buiter-says-if-ecb-does-not-intervene-thursdays-italian-bond-auction-it-will-likely-f

Thursday is going to be very interesting.

The ECB to guarantee to buy this straight from the banks that buy?

Wouldn't want to overtly look like they are monetizing debt.

There's certainly one market that's sounding the monetization alarm tonight. Perhaps The General can remind us, once he's finished perfecting his Scrooge McDuck impression :)

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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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