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On November 09 2011 12:27 Tien wrote:
Can anyone tell me how responsible Berlusconi is for this crises? Did his government completely overspend in the last couple of years?
Berlusconi isn't really responsible of this crysis, he even keeps saying that in Italy there isn't any, rofl.
The problem of Berlusconi is the fact that he completely paralyzed the italian parliament during the last few years to solve his personal problems, or to save his own companies.
It's not about what he did, but what he didn't do.
Ah yes, there are also all the things he does or says that aren't really healthy for the already bad reputation of Italy at international level.
The italian problem is mentality, we need a major shift in our way of thinking and acting. I don't see that coming anytime soon without really ugly things happening.
For europe in general, I think a real european governament is the necessity. Again I doubt it will ever happen.
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NEW YORK (CNNMoney) -- Italy's borrowing costs continued to surge for a third day Wednesday, with yields on 10-year Italian bonds climbing above 7%.
The surge comes a day after Prime Minister Silvio Berlusconi agreed to step down, a move that did little to quell investor fears about Italy's debt problems.
Yields on Italian 10-year bonds closed at 7.25%, after trading as high as 7.48%, marking its first foray above 7% since the euro was launched in 1999. Yields initially spiked after London clearing house LCH Clearnet raised margins on the amount of collateral traders had to put up to hold Italian bonds
The 7% level is significant because that was the mark Ireland and Portugal crossed shortly before receiving bailouts from the European Union and International Monetary Fund. Ireland's actually rose above 8%, while Portugal's breached 9%. And yields for Greek bonds touched the 10% mark.
The run-up on Italian bond yields comes despite a rush of buying by the European Central Bank, which has been struggling to keep those yields below 6%.
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it well get a lot worse before it can get better....
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There's a 5 billion euro Italian bond auction happening in a couple hours.
That's the next event to watch.
Will/won't the auction fail.
What will the yields be.
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You can find less recent, but more reliable rates from ECB:
http://www.ecb.int/stats/money/long/html/index.en.html
The 7 percent mentioned earlier is a continuation of the upward trend. However, if you look at the numbers, Portugal and Greece are completely screwed, while Cyprus and Ireland are arguably doing a lot worse than Italy.
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This question have always bugged me, but I guess this is the correct place to ask it:
What happens if a country goes bankrupt? Can another country buy out that bankrupt country and appoint it as one of its member states? (sorta like buying the country out?)
Or does the country fail inside out and...?
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if a country goes bankrupt simply all who lend that country money will loose some/all of it.
just like a company or person ... with much bigger impact ofc.
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no solid rules for what happens during sovereign bankruptcy
generally the lenders lose money, and the country loses the ability to efficiently trade with foreigners (because their coin is worth nothing, they need to pay in foreign currency or trade goods which is not easy)
but life goes on and after a few years said formerly bankrupt country usually emerges again
no country is forced to sell off part of its territory to service its debt, if that were true bankers would own all the lands since the 18th century or so :p
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On November 11 2011 03:44 Taguchi wrote:
no solid rules for what happens during sovereign bankruptcy
generally the lenders lose money, and the country loses the ability to efficiently trade with foreigners (because their coin is worth nothing, they need to pay in foreign currency or trade goods which is not easy)
but life goes on and after a few years said formerly bankrupt country usually emerges again
no country is forced to sell off part of its territory to service its debt, if that were true bankers would own all the lands since the 18th century or so :p
Hahah yup.
In some ways it's only slightly more reliable than the days of lending to a head of state. Back in the days of monarchies, the people who lent money to kings had absolutely no security they'd ever see their money again. I mean, the king could just turn around and say "You're not getting your money back" and there'd be nothing you could do! The only kind of security is that you'd damn well never lend him any money ever again if he defaulted or refused to pay up.
Same for a sovereign state. There's no greater body of law that can exert it's will upon a state, no international administrators that come in and liquidate all it's assets.
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All this shows how modern politics fail. Since when does the market decide for everyone ? We need a reform, we need all those traders down, we need to think again about how we use public money.
And most of all we need democracy back ?
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On November 11 2011 05:39 WhiteDog wrote:
All this shows how modern politics fail. Since when does the market decide for everyone ? We need a reform, we need all those traders down, we need to think again about how we use public money.
And most of all we need democracy back ?
The market is not about democracy, it's about money. You cannot magically create money by voting (well you can print it but that inflates it so it's not really a solution).
Mario Monti will likely be the italian new prime minister on monday. We will have a premier coming from the investment bank that has and is profiteering by speculating on the weak points of the euro. Doesn't make much sense, but he won't allow Italy to default, at all costs, which is again, not democratic, because maybe the people's best interest is a structured default and getting out of the euro, which was really introduced at a wrong exchange rate, and is now a hinderance on both exports and competitivity. But it won't happen, the powers behind Monti are too strong, i'm already impressed by his achievements in merely a few days. It's scary.
As a consequence, the spread is down to around 450 points and still going down, expected to stop at around 350. Maybe even lower. I'm glad we got rid of Berlusconi.. no wait, the financial powers did that for us, now we have to pay the price. The new government already seems to have a guaranteed maiority until spring at least. Monti even convinced Berlusconi to vote for him (so it seems, even more scary), and solved the Bini-Smaghi problem in less than 24h (Berlsuconi failed for weeks enraging France). So he would have like more than 2/3 of the parliament sustaining his government. Still not sure about that because anything is possible in italian politics.
The stability law passed the senate today in a surreal climate, i saw the opening and the president (someone thought to be close to the sicilian mafia) said there was no planned closure, they would work until it was approved. It did just a few hours later, and of course the man of honor welcomed Monti to the senate (he is now a life senator) by saying he's honored to have him there. I found that ironic :D
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On November 10 2011 03:02 Signet wrote:The above poster is right. You can't have a monetary union without fiscal union. It was a nice idea, but one that didn't work out. A similar thing happened in America with the Articles of Confederation, which had to be scrapped for a more robust Federal government. I read some interesting predictions on this collapse, the detail is impressive: http://pragcap.com/mmt-the-euro-the-greatest-prediction-of-the-last-20-yearsAdmittedly I know little about MMT economics (weekend reading!) or their track record on a broader scale, but these guys seem to have nailed this one.
Agree with you, except on the nice idea part. Monetary union without fiscal union is retarded.
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On November 11 2011 03:05 HaruRH wrote:
This question have always bugged me, but I guess this is the correct place to ask it:
What happens if a country goes bankrupt? Can another country buy out that bankrupt country and appoint it as one of its member states? (sorta like buying the country out?)
Or does the country fail inside out and...?
When a country goes bankrupt it simply says it will not pay the debts. (or it will only pay a portion, etc.)
The only consequences are that
1. the country may not get any more money lent to it
2. the country may be invaded by people that want their money.
Now a country CAN sell itself off or parts of itself off to another country, but it doesn't need to be bankrupt to do that. (you just need the government ro want more money.)
This would be less likely in a democracy since it would basically be people selling their vote (ie how much money would you need to be willing to live in an obvious dictatorship?)
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ROME (AP) — Italian Premier Silvio Berlusconi is expected to resign Saturday after parliament's lower chamber passed European-demanded reforms, ending a 17-year political era and setting in motion a transition aimed at bringing Italy back from the brink of economic crisis.
Respected former European commissioner Mario Monti remained the top choice to try to steer the country out of its debt woes as the head of a transitional government, but Berlusconi's allies remained split over whether to support him.
Their opposition probably won't scuttle President Giorgio Napolitano's plans to ask Monti to try to form an interim government once Berlusconi resigns, but it will likely make Monti's job more difficult.
Napolitano appealed Saturday for lawmakers to put the good of the country ahead of short-term, local interests — an indirect appeal to members of Berlusconi's party and the allied Northern League to work with the new government.
"All political forces must act with a sense of responsibility," he said.
Berlusconi's resignation was expected after the Chamber of Deputies, with a vote of 380-26 with two abstentions, approved economic reforms which include increasing the retirement age starting in 2026 but do nothing to open up Italy's inflexible labor market.
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To set the tone: At 20.30 Berlusconi resigned, resulting in,
Millions of Italians (worldwide) are celebrating an historic moment: the official resignation of PM Silvio Berlusconi, now on his way to the Presidential Palace. Huge celebrations are also being planned online, with Live video streaming from downtown Rome, Facebook pages, YouTube, on-going tweets and so on.
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Most of ppl outside europe including americans would likely think that most of this shit was the work of money-wasting, bum-caring irresponsible european socialists but here's the funny part : all these guys AND the guys they are currently replaced with are among the biggest apostles of modern capitalism :
The guy who replaced Papandreou was formed at the MIT in economical science and later was in charge of the greek central bank. He heavily contributed to the greek scam of hiding it's debt using a financial product created by Goldman Sachs and sold in Europe by Mario Draghi himsefl (current director of the central european bank) who was a former manager at Goldman Sachs europe.
The house is burning and we are going to be saved by the arsonists :p
Same thing happens in France when Sarkozy promotes himself as the new saint of debt control after he's been cutting taxes left and right like a madman for 4 years, and by taxes I don't mean the taxes you and me, poor middle class assholes, are paying every year if you know what I mean ....
Tough job not to be a skeptic in today's world :/
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On November 13 2011 04:51 radiatoren wrote:To set the tone: At 20.30 Berlusconi resigned, resulting in, Show nested quote +Millions of Italians (worldwide) are celebrating an historic moment: the official resignation of PM Silvio Berlusconi, now on his way to the Presidential Palace. Huge celebrations are also being planned online, with Live video streaming from downtown Rome, Facebook pages, YouTube, on-going tweets and so on. Source
kinda reminds me of 3rd world nations getting rid of their dictator 
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Well Germany's bund sale pretty much failed. And apparently the Italian yield is about to curve...
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S&P has downgraded Belgium to AA.
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EPT
