The European parliament has voted to ban "naked" credit default swaps, a controversial financial instrument used by traders to bet on the risk of a country defaulting on debt. With no solution to Italy’s problems in sight, the country can continue to raise money from the markets at high interest rates whilst the ECB can continue to buy Italian debt and try to cap yields. However, neither is sustainable. This would mean we are headed for an almighty crunch. Either we continue along the current path [where Italy is likely to run out of funding options], or Germany has to give way on QE. Thinking through these scenarios should make euro policymakers redouble their efforts to find a solution: make the EFSF fly or get external help. QE is probably the lesser of two evils when compared to euro break up, but recognizing that the ship is currently headed for the rocks should spur a change of course. Italian bonds now up to 7.039 pc.
Access Investments-Building Awareness - European Union-ROMANIA
Tuesday, November 15, 2011
The European parliament has voted to ban "naked" credit default swaps, a controversial financial instrument used by traders to bet on the risk of a country defaulting on debt. With no solution to Italy’s problems in sight, the country can continue to raise money from the markets at high interest rates whilst the ECB can continue to buy Italian debt and try to cap yields. However, neither is sustainable. This would mean we are headed for an almighty crunch. Either we continue along the current path [where Italy is likely to run out of funding options], or Germany has to give way on QE. Thinking through these scenarios should make euro policymakers redouble their efforts to find a solution: make the EFSF fly or get external help. QE is probably the lesser of two evils when compared to euro break up, but recognizing that the ship is currently headed for the rocks should spur a change of course. Italian bonds now up to 7.039 pc.
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LONDON—The euro-zone economy grew at a meager pace in the three months to the end of September, aided by pickups in consumer spending in Germany and France.
But other areas of the currency bloc contracted or stagnated in the third quarter, and recent surveys of business activity and confidence suggest the economy may contract in the final three months of the year.
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A woman drank at a cafe in Rome on Monday. Data showed the euro zone's economy limped to growth in the third quarter, but some national economies contracted or stagnated.
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Close.The European Union's statistics agency Eurostat on Tuesday said that the combined gross domestic product of the 17 nations that share the euro rose 0.2% from the second quarter and 1.4% from the third quarter of 2010.
Global Cash
Hundreds of millions of dollars might have gone missing from customer accounts as far back as four days before the firm filed for bankruptcy protection.
Italy was paying 7% interest rates or more a decade ago, before it entered the Euro. Non-European countries like Australia have rates similar to that now, and they are in no particular trouble. There is nothing special about 7%. The difference in Italy (and Spain, Greece, Ireland, etc) is that when interest rates fell after they entered the Euro they went on a consumer spending spree, funded by debt. It's the debt which is too high, not the interest rate. 7% rates may well be here to stay, as they were in the past. What has to happen is that these countries need to get their debt down. How to do that is the $64 question of course. But in the case of Greece at least, I can't personally see what is the big deal about default. Yes, it is impacting the credibility of all Euro countries. If I was Greek (or perhaps Italian) I would say "so what?"
This is madness.
Can't wait for spanish bonds to hit 7% +
:-) The EUSSR is dying, yippeeeeee!!!!
The current high level of inflation reflects
the ill-considered increase in the
standard rate of VAT earlier this year, and previous massively steep increases in import and energy prices, huge petrol price increases, including
recent domestic utility price rises. As
these price increases are likely to continue increasing for some time to come
it is likely that inflation will edge towards 6pc or more during 2012,
especially if the Bank pumps in another £100bn of QE. In the absence of
those temporary (they’ll never believe that
one!) factors, it is likely that inflation would have been below the 2pc
target. While we can be confident about the direction of change of inflation
over the coming months (i.e. upwards),
we remain uncertain about the precise pace and extent of the anticipated increase drop in inflation.”
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