Eurozone debt crisis

[Ferru123]

Spanish debt crisis returns as Germany nears bailout fatigue - http://www.telegraph.co.uk/finance/fina ... tigue.html

Despite the Spanish bank bailouts and Spain's breathtaking austerity measures, Spain is still having to pay an unsustainable rate of interest to borrow. I can't help wondering if things are going to come to a head sooner rather than later...

Jeff

[giulio2010]

I really share this guy thoughts. here what he wrote..

pumpernickel

Today 06:34 AM

Germany's contribution to Europe has been to let its DM mutate into the Euro giving all users of the Euro the benefit of a strong and solid currency, trusted by the markets.

A currency none of its present users in the countries in trouble wants to exchange for their own old currency, even though this would allow them the easy option of devaluing whenever they lose competitiveness, which is the cornerstone of British economics philosophy, their mantra, but does it really work for them, devaluation and creation of money from thin air?

"The markets" seem to believe that and let them borrow at very favourable rates, or do they? Who actually is buying British bonds at such favourable rates? The BoE, yes, with money created from thin air. Would Italy get away with such a policy or even France? Of course not. "The markets", we must know, are located in London and they do not trust anybody south of Calais. Never did. This is the problem.

So even if Spain went back to the Peseta, what would they gain? Temporary relief due to a devalued currency but dependent on imports and not just exports as they are like the rest of us, they would be worse off, wouldn't you agree?

So we better make the Euro work. Muddle through in tiny little steps as Frau Merkel is trying to do. Stick to her "sink or swim" philosophy, which also worked for Germany. Help those countries to find their character.

There is no option for, contrary to what some nutcases believe, Germany cannot bail out Spain or Italy and has made this abundantly clear. Not from lack of goodwill. From lack of money. Rajoy got the message and so has Monti.

Hating the Germans for something they are unable to do is dumb but .... if it helps you ... let us be your scapegoat. Somebody has to be.

So why not just print it, like the IMF, USA and allegedly the BRICS are demanding. Do as the US and UK do, why not? Because then the Euro would lose its hard currency status and become toilet paper like the other two and we would be worse off competing with them for lower currency rates. Remember the 1920/1930s?

[Ferru123]

Spain's shares drop 5.8% in a day - http://www.telegraph.co.uk/finance/fina ... state.html

IMHO, unless there is swift and decisive intervention, things could escalate severely. I can't see the interest rate Spain pays dropping without some form of action, and if Spain needs a 400 billion euro bailout then what happens next to the global economy is anyone's guess...

Jeff

[superfrank]

IMHO, unless there is swift and decisive intervention, things could escalate severely.

what is required is nothing. let the market sort things out.

we've had invention, intervention, intervention and it only postpones the day of reckoning. it's time to face the music (but obviously they won't... because they believe they can buck the market).

[Ferru123]

This is a bit like the Lehmann Bros dillemma of 2008.

Intervention on the size required to save Spain will be extremely costly, and our grandchildren's children will probably still be paying for it. But as with Lehmann, the alternative - a global financial meltdown of unprecedented proportions, with the possibility of complete social breakdown - doesn't bear thinking about.

There's a lot to be said for keeping the patient on life support in the hope he'll eventually recover, rather than just pulling the plug...

Jeff

what is required is nothing. let the market sort things out.

[giulio2010]

I have a question for the experts...
The Spanish banks have no liquidity but how is it possible that they are still finance expensive transfers for Barcelona and Real Madrid and pay their stratospheric salaries?

[CaerMyrddin]

It is likely an important part of their revenues are coming from abroad?

[giulio2010]

True...
Do you think if a business ask 100K loan to the bank, showing the possible return from abroad contracts, would the spanish bank lend that money? That's one of the main reason why businesses are closing down. Despite they have contracts with a secure return they struggle to be financed by the banks, but not the spanish league teams...

[CaerMyrddin]

Football is a strange bussiness, that will have to shrink imho. Rationality is a strange concept in a world so dominated by passion...

[giulio2010]

This comment deserve 1000 LIKE on facebook.

Football is a strange bussiness, that will have to shrink imho. Rationality is a strange concept in a world so dominated by passion...