An interesting point -- Spanish 10 year debt is yielding 7.5pc, half of what it ought to yield but
enough to spook markets not yet ready to face the inevitable deflation of what
has long been a bond super-bubble. This bubble is particularly evident in
France. The debt levels which the country has are as unsustainable as Britain’s,
yet its policies are more irresponsible and its remedies more restricted.
Although it is considered a core country in the eurozone, France’s economic
profile now bears more resemblance to Greece’s the Germany’s. Public debt in
France is at 86.1pc of GDP (146pc if ECB liabilities and bank guarantees are
included). The projected budget deficit this year is 4.5pc, with France having
exempted itself from the EU’s instruction to bring deficits down to 3pct by the
end of the year. These numbers are not unusual in the context of eurozone
economies in general. What distinguishes France is the lack of political will to
address them and, as a consequence, a projected debt to GDP ratio which would
place it firmly amongst the PIIGS grouping. A 2010 paper by the Bank of
International Settlements – cited by economist John Mauldin in his brilliant
recent dispatch on ‘hidden lions’ – sought to model the likely effects of three
separate policy paths by European governments. These range in severity from
governments essentially carrying on as they are, to the most extreme austerity
the authors believe to be politically possible, a gradual downwards movement in
government spending while age related entitlements are frozen.
Access Investments-Building Awareness - European Union-ROMANIA
Friday, July 27, 2012
An interesting point -- Spanish 10 year debt is yielding 7.5pc, half of what it ought to yield but
enough to spook markets not yet ready to face the inevitable deflation of what
has long been a bond super-bubble. This bubble is particularly evident in
France. The debt levels which the country has are as unsustainable as Britain’s,
yet its policies are more irresponsible and its remedies more restricted.
Although it is considered a core country in the eurozone, France’s economic
profile now bears more resemblance to Greece’s the Germany’s. Public debt in
France is at 86.1pc of GDP (146pc if ECB liabilities and bank guarantees are
included). The projected budget deficit this year is 4.5pc, with France having
exempted itself from the EU’s instruction to bring deficits down to 3pct by the
end of the year. These numbers are not unusual in the context of eurozone
economies in general. What distinguishes France is the lack of political will to
address them and, as a consequence, a projected debt to GDP ratio which would
place it firmly amongst the PIIGS grouping. A 2010 paper by the Bank of
International Settlements – cited by economist John Mauldin in his brilliant
recent dispatch on ‘hidden lions’ – sought to model the likely effects of three
separate policy paths by European governments. These range in severity from
governments essentially carrying on as they are, to the most extreme austerity
the authors believe to be politically possible, a gradual downwards movement in
government spending while age related entitlements are frozen.
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6 comments:
I'm amused that Brits swallow the Wall Street hype that the Eurozone is THE problem. This is, in truth, a smokescreen by the Americans to deflect attention from where the REAL problem lies - the US economy.
Europe's total GDP is greater than Americas, its total debt is lower, and growing at a far lower pace.
Europe's leaders are working together to solve its finances, the US political infighting is in gridlock.
California is America's Spain, except Spain's infrastructure is up-to-date, Cal's fell apart a decade ago.
Florida is America's Italy, except without the industry or culture.
Nevada is America's Greece, i.e. based on a long dead past.
What is going to be the cost of saving a currency that will fail in the next decade? The Germans learnt a lesson off the USSR. You cannot dominate many nations by military force. The way to dominate is with economic might and stealth.
The future is clear and it is not what the present elderly politicians who will not be around in 20 years are telling us. They will be spending their twilight years on inflation proofed EU pensions and not have any worries.
EU's Barroso urges Greek action
European Commission President Jose Manuel Barroso tells the Greek government to "deliver, deliver, deliver" key structural reforms.
Financial inspectors from the troika have arrived in Greece to draft their final report on whether the country has made enough progress with its austerity and reform efforts. But many Greeks have already lost hope and are counting on the worst -- an exit from the euro zone.
ECB president Mario Draghi had raised expectations in the market that the central bank could announce that it will start buying bonds again under its controversial Securities Market Programme (SMP).
"The Bundesbank continues to view the SMP in a critical fashion," a Bundesbank spokesman said.
She said the bank had not changed its positions on bond purchases of the Eurosystem or bond purchases by the EFSF rescue fund.
"The Bundesbank has repeatedly expressed in the past that it views bond purchases critically because they blur the line between monetary and fiscal policy."
The powerful German central bank also rejected any idea of the eurozone's permanent rescue fund - or European Stability Mechanism (ESM) - getting a banking licence so it could tap central bank funds.
I am reminded of the recent call from Merkel for 'More Europe' with as she admits,loss of sovereignty for those member nations in the eurozone who yield to the German demands.The movement towards a political union is now gathering pace,an essential if fiscal and monetary control is by a Brussels treasury.The other powers I have mentioned concerning sovereignty surrendered will be lost if this country is a member of any political union, a United States of Europe.
Has Cameron got the backbone to tell Merkel and the Krauts where to go if they start demanding concessions from this country,I doubt it, witness the veto and the backdown soon after?The LibDems will fall over themselves to do as Merkel demands,as will Ken Clarke.Seeing Ed. Milliband in Paris a couple of days ago I cant see him standing up to Merkel and Hollande.I can see him like his brother who lied over a Lisbon Treaty referendum doing likewise.When Merkel next demands of Cameron that he accept the financial transaction s tax, and she will,how will he react,not strongly I fear?
It is said that a country gets the politicians it deserves,what has this country done to merit the like of Cameron,Clegg and Milliband,3 pygmies devoid of integrity,moral courage and honesty?It may be a small point but note how all 3 give the same reasons for rejecting an E.U. in or out referendum,wont admit to the real reason, they fear an out result.
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