Sunday, September 4, 2011

How will a destabilised Europe assist a HPC

German endgame for EMU draws ever nearer

"The IMF must know from its errors in Argentina a decade ago that Greece needs a 40pc devaluation and 50pc debt forgiveness to claw back to viability"....... "Needless to say, battered banks, insurance companies, and pension fund will not wait for further rounds of punishment. They know that Italy must redeem €14.6bn of debt this week and €62bn by the end of September, the highest ever in a single month. It must roll over €170bn by December"...."and..."

Posted by alan @ 09:55 PM (1320 views)
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5 thoughts on “How will a destabilised Europe assist a HPC

  • Oh dear. http://www.telegraph.co.uk is looking a bit poorly ! Lots of Google links to the German endgame article, though, so it must be a pearler.

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  • We are probably on the cusp of a major destruction of wealth – that held in sovereign debt instruments worldwide.

    The risk/reward computations on this class of investment have been crazy ever since the banking crash. They are no longer safe investments, as they are so vulnerable to inflation, not to mention default; yet the yields paint them as risk-free.

    I’m pretty confident that this misplaced trust will implode in style, and possibly quite soon. When it does, interest rates are likely to swing from ultra cheap to expensive (possibly ultra expensive)

    Then will follow the next destruction of wealth, seen in the US and Ireland already – the destruction of housing wealth in the UK (and Spain etc..)

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  • Quite right, Uncle Tom. UK gilt yields are 2.75% and yet recent poor growth means that George Osborne will still be borrowing tens of billions in 2015-16, when he had promised to break even. Our long-term debt profile is still exponential.

    The immediately impending and unavoidable break-up of the Euro, and the eventual but equally inevitable soft or hard default of the over-borrowed US and UK, can only lead to higher interest rates throughout the Western world. Higher UK mortgage rates and lower house prices will be one small consequence of this global re-pricing of sovereign debt.

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