Sunday, December 11, 2011

All talk and no walk

Eurozone leaders deluded if they think this 'sticking plaster' treaty can solve the debt crisis

So, now we know what the latest euro-crisis summit has to offer. The fifth comprehensive effort to stabilise the eurozone in nineteen months, this latest Brussels gab-fest produced a slew of headlines and initiatives. But what did it really achieve?

Posted by dill @ 11:17 AM (3825 views)
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11 thoughts on “All talk and no walk

  • general congreve says:

    It bought a little more time, and that is better than nothing for the crooked [email protected] running the show.

    Also it might help families Europe-wide have a more enjoyable Xmas, because hopefully they can put off sealing with the sh1tstorm that is coming until 2012. Of course, the price for this is that it mightily p1sses me off, because a year ago I predicted we’d have at least one country leave the Euro before then end of 2011, so their selfish gain is my loss. Bah-Humbug!

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  • general congreve says:

    Here’s another take on it, that is in agreement with my own views on the situation the west finds itself in, i.e. painted into a corner:

    It’s the end of deficit spending in Europe as we know it. That’s how Charles Biderman, of TrimTabs, rightly describes the unwilling-to-compromise German’s (perhaps heroic) attitude to their fellow European sovereigns. From his perspective, this forced austerity will mean slower growth and with that all chance that the European nations can ‘grow/tax’ their way out of this charade. He notes there is simply no way they can grow fast enough to be able to kick the can far enough down the road for it to matter. Pointing to his ‘better early than late’ calls on markets over the last 40 years, the man from Sausalito sees it as inevitable that the practical insistence on the elimination of deficit spending will force banks into bankruptcy, leading, as asset values are marked down, to a spiral collapse in equities. He then dismisses the simple-minded decoupling perspective as if no new Keynesian-inspired ‘technology shift’ occurs, US growth will be in the doldrums as European deleveraging drags global growth down with it.

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  • Indeed, a sticking plaster!

    What about Europe’s unrepayable debt – who covers that one? The cut in Euro bank rate is almost irrelevant where Germany pays about 2.5% and Portugal pays 7% for government borrowing.

    Any sign of more financial discipline actually being introduced into southern Euroland? – Greece, Italy…I think not. How about tax collecting – will that get better?

    Where is the workable plan? Is it led by trustworthy people? Barroso isn’t even elected, and is hardly inspiring…. Maybe the charismatic Van Rumpuy 🙂

    Euro banks are still hoarding lots of property debt in undisclosed vehicles. Lloyds was up front in negotiating almost a £1bn sale of dead wood pwopertee loans to Loan Star last week. “Tests” appear to be no indicator of future health.

    In Europe, its like a kids game of musical chairs, but in this version they seem to think that a new chair (support) will be added by a magical hand! I think some countries will fall on their bum pretty soon!

    Yes, and commodities will rise as people see the dithering. I notice Stanley Gibbons (stamps) has taken up a lot of space on this site advertising investments to weather the coming storm….any takers?

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  • 3 months and they will all be back, trying to thrash out another plan to ‘kick the can down the road’

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  • It all really boils down to Italy – the eurozone member who is too big to bail out..

    Not the highest budget deficit, but one that has to be brought down rapidly to reassure markets, whilst at the same time, their dramatically increased borrowing costs push in the opposite direction.

    But raising taxes and dropping spending to close a deficit have a bad habit of pushing down GDP and tax revenues.

    I think it’s a fair call that if Italy drops into recession, and the natives take to the streets to overthrow their unelected govt; then that will be the end game for the euro.

    But even if Italy manages to struggle by, and their people don’t riot – the combined woes of all the other eurozone nations will come home to roost..

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  • @4 “3 months and they will all be back”

    They don’t have that long. Everyone’s manoeuvring to save themselves from this protectionist rabble.

    meanwhile…

    @5 “and their people don’t riot “

    Indeed.

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  • general congreve says:

    But if the Euro fails the whole global financial system comes crashing down, so it must not be allowed to fail, but it will! What a palava!

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  • GC @7,
    Surely the ECB will resort to money printing after a couple of countries drop out…..just my wild guess, of course.

    I can’t fail to agree with UT. Italy is too big to bail….I wonder how long things can be delayed? Croatia seem set to join the EU in summer 2013. I wonder what the Eurozone will look like then?

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  • Sorry, I forgot this one…

    “A Reuters survey of 13 economists found 11 thought France would be downgraded by one of the major ratings agencies within the next three months”.

    “A poll this weekend found just over half of French people feared a credit rating downgrade would have a big impact on their daily lives. A one-notch cut would hit the country with extra interest payments of up to €3bn (£2.5bn) a year if the markets react by pushing up bond yields”. says the Guardian on-line.

    My guess is that we won’t need to wait 3 months…..anyone know much about investing in stamps…? 🙂

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  • general congreve says:

    @9 – Stamps? Really? Come on Alan, just buy some precious and sleep well. Stamps indeed. Whatever next? Swiss Francs 😉

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  • “just buy some precious and sleep well”

    Hope it finds some support soon!

    (Still miffed after selling most of mine at £800 🙂 )

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