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Citi Forecasts Greek Devastation, Unstoppable Debt Spirals In Italy And Portugal

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http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100025913/citi-forecasts-greek-devastation-unstoppable-debt-spirals-in-italy-and-portugal/

If Citigroup is right, the slight rebound in Europe over the summer will not be enough to stop Club Med going from bad to worse, with a string of soft defaults/restructurings.

I pass their latest forecasts on to readers. I do not endorse them.

Italy will bounce along in near-permanent recession with growth of 0.1pc in 2014, zero in 2015, and 0.2pc in 2016. The debt will punch above 140pc of GDP, beyond the point of no return for a country with no economic growth or sovereign currency.

"We do not expect the public debt ratio will enter a downtrend in coming years, and we suspect that some form of debt restructuring (maturity lengthening and/or coupon reductions) may be likely eventually," said the bank.

Portugal is in an even worse state, with growth of: 0.6pc, 0.0pc, 1.0pc, over the next three years, with debt hitting 149pc of GDP by 2015, and unemployment rising again to 18.3pc:

Given the fiscal tightening still to come, ongoing private deleveraging and ensuing poor nominal GDP growth prospects, doubts still exist about the sustainability of the Portuguese public debt in our view."

A second full bail-out programme remains a clear risk in the event of market sentiment deteriorating. In any case, we think a Greek-style public debt restructuring unlikely in the near future, but a restructuring of some government contingent liabilities is still possible.

Greece continues to be a catastrophe. The alleged stabilisation will prove to be a false dawn. The economy will contract by a further 2.9pc in 2014, and 1.4pc in 2015, pushing unemployment to 32.4pc, and the debt to 201pc of GDP.

It's hard to see how the single currency is going to cope with all this stress, unless they can magic some growth it appears we are in a death spiral.

Still if we only they can create highly productive financial sectors we can rescue the world.

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http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100025913/citi-forecasts-greek-devastation-unstoppable-debt-spirals-in-italy-and-portugal/

It's hard to see how the single currency is going to cope with all this stress, unless they can magic some growth it appears we are in a death spiral.

Still if we only they can create highly productive financial sectors we can rescue the world.

...erm yes.

my prediction.

greece and cyprus become russian protectorates.(rally irritates turkey, but the turks are scared the russians will do to them what the yanks just did to syria)

italy gets swamped with fleeing migrants from syria and surrounding countries after USA really goes apeshit at them after next "event"(basically the idea of state sponsored terrorism fails...as the response from the yanks,brits and french is to literally obliterate the state in question in totality...like no survivors anywhere

...the approach is effective but causes international outrage......causing solidifying of new french anglo-american bloc)

also stirring up massive hostility from the likes of libya who are, in truth, just across a small stretch of water .

britain says "no more to EU meddling "and leaves them to sort out their own problems....

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It's entirely possible that our policy of trying to be the cleanest shirt in the laundry will kill our exports and screw employment further.

It's entirely possible the continent that hits the bottom first ends up with an export led recovery and wins.

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It's entirely possible that our policy of trying to be the cleanest shirt in the laundry will kill our exports and screw employment further.

It's entirely possible the continent that hits the bottom first ends up with an export led recovery and wins.

Yep.

Despite QE. HTB and a range of other funny money gewgaws standards of living have been declining as fast in the UK as in some of the so called European basket cases

With regard to wages only the Greeks, Portuguese and Dutch appear to have fared worse than us

http://www.bbc.co.uk/news/business-23655605

If this is a victory for the Anglo-Saxon economic model then I would not like to see the defeat

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It's entirely possible that our policy of trying to be the cleanest shirt in the laundry will kill our exports and screw employment further.

It's entirely possible the continent that hits the bottom first ends up with an export led recovery and wins.

Translated some Spanish newspaper stories earlier this month, with the push on to bring a lot more reforms on the expensive public sector.

10/10/2013

Emprearial Council for Competitiveness (CEC), which brings together leading companies from Spain, says that one of the country's competitive advantages is that "the workforce is between 12% and 30% less expensive than in comparable countries", referring to Germany, France and Italy. Specifically, the CEC estimates are lower by 20% on average.

The CEO of CEC, Fernando Casado, has highlighted the strength of Spanish exports and the need to gain size.

in full: http://www.elmundo.es/elmundo/2013/10/10/economia/1381404118.html (in original Spanish language)

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Soc Gen thinks the US Fed is about to increase QE.

So does Max Keiser. He thinks that QE will be ramped up rather than tapered. It's actually quite logical. QE can never be tapered because it is a catch-22 situation. As soon as Bernanke even hinted at tapering the bond market went crazy. The US would not be able to afford the debt payments higher interest rates would cause.

Edited by fru-gal

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