Posted on 08/07/2011 6:12:52 AM PDT by blam
Today, There's A Much Bigger Story Than The S&P Downgrade
Joe Weisenthal
Aug. 7, 2011, 7:02 AM
Worried about the Monday open? You probably should be, but really, the S&P downgrade isn't the big worry.
It's Italy.
Italy has the third largest bond market in the world (after the US and Japan), and it's teetering on the brink of disaster.
The belief in Germany is that existing bailout mechanisms aren't sufficient to save the country and that expanding them isn't the right idea, since at that point you're talking about placing massive risk on Germany's sovereign debt itself.
The last backstop is the ECB, which will be deciding TODAY whether it will begin intervention in the Spanish and Italian markets. Last week German leaders (not surprisingly) opposed this, however that was before Berlusconi came out on Friday with an announcement of accelerated austerity.
It's also not clear whether, at the margins, ECB bond buying will be enough to halt the crisis, unless it really brings a gigantic bazooka to the game.
Regardless, concerns about the US debt, the changed perception of the dollar, and the political mess are all valid. Tonight and tomorrow, It's about Italy.
(Excerpt) Read more at businessinsider.com ...
As long as we don't bail them or their banks out.
“disaster”? That is silly. The war in Italy was a disaster. Financial stuff is just that..............boring.
The powers that be, it was explained to me on Friday by a commodities broker, are “trying to avoid social unrest.” I said social unrest was unlikely. In 1929 some rich guys jumped out of buildings with the crash, but the majority kept on struggling, marrying, raising kids. Those activities are what makes up life. Caviar for breakfast and a maid just don’t matter that much to people.
“Tottenham is the Amish part of London town, of course.”
Too late. I read a couple of weeks ago in one of the financial rags, Financial Times of London IIRC, the Fed printed $14.6 Trillion to bail out the European banks. Haven't heard it mentioned at all in our press outlets.
The "majority" rarely does anything except make stupid decisions to appease a violent faction threatening to burn civilization over lost handouts.
The majority is running out of handouts to keep the rabble quiet.
The riot in London was in the black part of town after some criminal was shot and killed by the po po. Not because the market for bonds crashed.
Back in 1929 we didn’t have government-funded welfare to the extent we do now. We didn’t have millions of violent underclass to the extent we do now. They will be most displeased on the day the welfare checks don’t come.
There is a difference between a crash and the welfare checks not coming..........
Not doubting the story but just amazing that Italy has a bigger bond market than Germany or Enlgand.
Germans will abandon the Euro and revert to the Deutsch Mark
they should. the euro was super dumb experiment.
When Europe unified upon the Euro, it was simply the working nation(Germany) co-signing a bad loan for their drunken brothers.
Proverbs warns against co-signing.
The article is spot on.
Richard Bove, a bank analyst at Rochdale Securities in Florida, said a default by Italy, while unlikely, would create “significant problems” for Italian businesses and individuals that could spread across the financial system and hit U.S. banks.
“The exposure to Italy is substantial if you look beyond the sovereign debt situation,” he said. “It would be impossible for American banks to avoid being hurt if Italy were to default.”
It’s not hard to see where the Obama folks will go with this next year: “don’t blame us for the mess we’re in. It’s a global phenomenon. Why, if all that bad stuff had happened in Italy, everything would be hunky-dory right now. And by the way, did we mention that things would have been WAY WORSE if we hadn’t done what we did,” yada, yada, yada?
If Italy goes down the tubes, we should point out the Socialist policies that led up to it - it could be a boon rather than a bane.
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