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Barroso To Propose Eurobonds

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Excellent news, I hope they go through it.

These bonds will only have value all the time the EU can strong-arm Germany into paying for the folly of others, eventually the Germans will say 'enough' and hasten the breakup of this vile institution.

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http://www.bbc.co.uk/news/business-14913517

Solving a debt crisis with more debt. Moving the consequences of someone's action on to someone else who had nothing to do with (moral hazard). More money for the bankers who set up these deals at the expense of beleagured taxpayers?

Can anyone see anything good in this proposal?

This seems like a way to further increase the power concentrated in Brussels. Imagine that they issue eurobonds and the money is put into a common pool. Then they demand that banks in the EU are recapitalised. They recapitalise them (acquiring control over these banks) using this money. Suddenly the eurocrats control much of the banking system across europe.

Edited by newbie

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Excellent news, I hope they go through it.

These bonds will only have value all the time the EU can strong-arm Germany into paying for the folly of others, eventually the Germans will say 'enough' and hasten the breakup of this vile institution.

will say 'enough' and hasten the breakup of this vile institution. start building panza's.

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I used to hate signing joint and several tenancy contracts when I lived in shared houses. I can't see why it would work better for countries.

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Barroso To Propose Eurobonds

Sure, good luck with that when Merkozy already said loud and clear in front of the world Eurobonds are not a solution in the short term.

Another shining example of European harmony and unity of intent :D

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http://www.bbc.co.uk/news/business-14913517

Solving a debt crisis with more debt. Moving the consequences of someone's action on to someone else who had nothing to do with (moral hazard). More money for the bankers who set up these deals at the expense of beleagured taxpayers?

Can anyone see anything good in this proposal?

Nope - It's more of the 'let's move it off this balance sheet to another one and pretend we've cured it' game. Even worse it may allow yet more borrowing at cheaper rates to those lunatic govts who borrowed so much they could not service it or pay it back in the first place. Is that clever or stupid?

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It's probably the only way French and Italian banks (among others) can be 'pretend' recapitalised.

Edited by _w_

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Something needs to be done about the EU. I am joining and donating money to UKIP in a few weeks. I hope to help somehow. We need to get out of this POLITICAL UNION that we were never asked about.

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Something needs to be done about the EU. I am joining and donating money to UKIP in a few weeks. I hope to help somehow. We need to get out of this POLITICAL UNION that we were never asked about.

I am told 3 out of 4 UK laws are produced in Brussels. UKIP will soon be deemed a secessionist / terrorist organisation.

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I'm a bit confused about what exactly is being proposed... it might be:

  1. Bonds issued with joint-and-several national liabilities.
  2. Bonds issued with liabilities apportioned to several states.
  3. Bonds issued by the European Commission itself where the commission is liable.

The problem with 1 is that the optimum strategy is for nations in difficulty to default on their Eurobond liabilities - as they'll be covered by someone else... or, if the Eurobonds get priority for payment, it will make default of non-Eurobonds more likely - thus hastening default either way.

The problem with 2 is that it is just an obfuscation - it the market preferred this sort of bond, it would have provided by investment banks - just as they did making CDOs from several MBS. I seriously doubt that there's a call for this for sovereign debt - which means the Eurobond would be self-defeating if arranged this way - as it would be more expensive than borrowing conventionally.

The problem with 3 is that it makes the bankruptcy of the commission inevitable. Nations in trouble would be motivated to cause a political spat and withdraw funding from the commission on whatever are the first (even spurious) grounds they can dream up.

It can't work, can it? It's not complicated enough to baffle - so there's no advantage of obfuscation... just an overhead of risk and bureaucratic management.

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  • 337 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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