Posted on 08/04/2011 1:40:08 AM PDT by PieterCasparzen
Although the second bailout of Greece may have calmed markets in the short-term, the recent volatility in Italian and Spanish bond markets signalled the beginning of a new and critical phase.
Europe’s policymakers had always hoped that by bailing out Greece, Ireland and Portugal, the crisis could be restricted to these relatively small economies.
This strategy has clearly failed and the measures taken at the recent summit recognise this fact.
Slow progress
The future shape of the eurozone will likely be determined by how events unfold in Italy and Spain.
[...]
So what is the endgame for this crisis going to look like?
Given the general lack of cohesion in policymaking, a messy divorce is a real option and this would have hugely negative implications for the banking sector, the global economy and risk assets in general.
The only real alternative in my view is much closer fiscal integration and the launch of a single eurozone bond, jointly guaranteed by all members of the single currency. While it may be hard to imagine at the moment, I think this could be an attractive proposition for investors.
[...]
It was no surprise that the AAA-rated five-year bonds recently issued by the EFSF to fund the bailout of Portugal were snapped up, with nearly half of the demand coming from Asian investors.
Of course, the introduction of eurozone bonds is not going to happen overnight and there will be plenty of opposition to the idea, not least from northern European taxpayers who would complain they are subsidising the debts of profligate countries.
Treaty changes would almost certainly be required.
However, the moment will arrive when the EU and Germany in particular, will face the choice of either letting the eurozone fall apart or taking another decisive step towards fiscal union.
(Excerpt) Read more at ifaonline.co.uk ...
I see they’re putting things on Germany again. Not very clever to allow the eurozone’s central bank to be on German soil. Now Germany’s got too much power.
There is only one real solution and that is default. To delay default is only going to cause more chaos than there already will be.
France and Germany were both jockeying to be top dog in the EU.
Now that Germany has basically won, it will fall apart as nationalistic interests rise to the forefront and there is probably war coming as a consequence.
“It was no surprise that the AAA-rated five-year bonds recently issued by the EFSF to fund the bailout of Portugal were snapped up, with nearly half of the demand coming from Asian investors.”
“AAA-rated five-year bonds” This reminds me of triple A rated security back mortgages by S&P and Moody’s.
Germany won't let it fall apart, not on the continent anyway. A united Europe is the dream of their elites.
Now that Germany has basically won, it will fall apart as nationalistic interests rise to the forefront and there is probably war coming as a consequence
Europe has had several attempts to unite it and none of those attempts were successful for long.
I can’t see this as any different.
You mean ending in a big war?
Europe has had several attempts to unite it and none of those attempts were successful for long.
I can’t see this as any different
It should be built by the English. If the Russians built it, there would be communism and squalor. If the Germans built it, there would be tyranny and brute force.May not seem like it now, but the big swing towards antisemitism all over the continent (even in Germany, especially among the majority who believe that Israel's conducting a "war of extermination against the Palestinians) could make things explode in a surprising instant.
Easy - the strong countries break away from the spendthrift Socialst goofbal countries (I am looking at YOU Greece and Spain!) and go back on their own currencies.
I lived in Germany when the Euro currency took over - I knew it would be a disaster. I just didn't think it would happen this quickly.
Now we all sink on a single, massive ship.
Europe sold socialism for decades and has finally run out of other people's money.
Chickens, meet roost.
This is a glimpse of what one-world government looks like.
The dysfunctional states take everybody down with them.
It's interesting how this parallels the lending approach of a single bank.
A bank which carefully loans ONLY to qualified and responsible borrowers remains solvent. The bank which does not inevitably folds.
The primary difference between Greece and Italy is that Italians pay taxes for social welfare programs they cannot afford while Greeks avoid paying taxes for social welfare programs they cannot afford. The common stain is unaffordable social welfare programs.I think the great experiment in Europe with collectivist social welfare programs has caught up with them and the historically economically weak countries of southern Europe are the canaries in the coal mine for the rest of Western Europe.Western Europe is economically uncompetitive globally and the Asian tiger is going to eat their lunch. The US is not far behind as Obama plays catchup to transform the US into a Euro social welfare state.
There is no puzzle. Stop the freakin spending. Stop bailing out countries that refuse to curtail spending. Let them swirl down the toilet. Put a bunch of tanks on their borders so the violence doesn’t spill over into other countries when the civil war starts. Let them riot until there is nothing left. Puzzle solved.
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