Monday, November 29, 2010

“The crisis is intensifying and worsening”

Contagion strikes Italy as Ireland bail-out fails to calm markets

Spreads on Italian and Belgian bonds jumped to a post-EMU high as the sell-off moved beyond the battered trio of Ireland, Portugal, and Spain, raising concerns that the crisis could start to turn systemic. It was the worst single day in Mediterranean markets since the launch of monetary union.

Posted by devo @ 08:52 PM (2662 views)
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9 thoughts on ““The crisis is intensifying and worsening”

  • fallingbuzzard says:

    Do you expect the ECB to take action on Thursday?

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  • Devo ….at it again

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  • Funniest thing I have seen all day 🙂

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  • Splendid. I thought that they’d do Portugal first, then Spain, then Italy (doing Belgium in between courses) but if they have leap frogged straight to Italy then it is serious.

    Problem is, it’s the same team playing against itself – the bankers make a profit by over-lending to individuals and countries (manifested as Home-Owner-Ism and Big Government in the UK), then they make another profit by short selling the country or shares in banks; then they get a bail out from the taxpayer for any losses that they might have suffered in Rounds 1 or 2.

    Seeing as the bankers start off with no money of their own, it’s all gravy from their point of view (it’s not like Fred Goodwin or Dick Fuld are going to starve in a garret).

    On the losing side is always Timmy Taxpayer – or worse, future generations of Timmy Taxpayers.

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  • Does this mean you are against joining the Euro, MW? 🙂

    “Investor reaction comes as a bitter blow to eurozone leaders”, who expected the €85bn (£72bn) package for Ireland agreed over the weekend to calm “irrational markets”.

    What a surprise. Don’t they know anything? It was a foregone conclusion after almost every sensible newspaper published league tables of debt last week.

    Time for the taxpayer to reach for the kiddie’s money boxes!

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  • “Investor reaction comes as a bitter blow to eurozone leaders”, who expected the €85bn (£72bn) package for Ireland agreed over the weekend to calm “irrational markets”.

    Yes, the markets have been irrationally going up in my opinion. The markets need to reset to a sensible level, another 25% of the FTSE by Feb.

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  • There is no point distinguishing between European banks because when/if they default the losses have to be covered by another bank, because everything is within the banking system.

    I remember Jim Rogers commenting that the biggest shock would be if the UK went bust. He never mentioned this again and has fallen oddly silent on the subject of the UK.

    I don’t think, for all the shouting, that the Irish will cover their bank losses. However, I don’t see any more money printing also. I notice that the Conservatives have held off the housing benefit reforms, I doubt very much that this is out of concern for swift change for the landlords and more because the market has observably started tanking.

    Thank god my net worth is zero, otherwise I wouldn’t be able to sleep one way or the other.

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  • Alan @ 5, the benefits of everybody using the same currency are obvious (and there are a lot of benefits), but while it’s a great idea in theory, it’s one of those things that sadly never works in practice.

    There have been dozens of currency unions over the past few centuries (ever since they invented paper money and/or government borrowing, which are much the same thing) and nearly all of them have failed (the US dollar I would count as a success). The most successful ones are the unofficial ones, like Luxembourg using Belgian franks, or the Austrians pegging the schilling at seven to one Deutschmark.

    The cost of failure is twenty times higher than any benefits from a possible success, so all in all, it’s best not to try in the first place.

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  • Just being picky – but error in paragraph:

    The euro fell sharply to a two-month low of €1.3064 against the dollar, while bourses slid across the world. The FTSE 100 fell almost 118 points to 5,550, while the Dow was off 120 points in early trading.

    Should be…. euro fell sharply to US$1.3064…

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