The debts Greece was hiding are becoming public. Germany's unwillingness to pay Greece debts has caused the creditors trying to sell Greek debt at any price - and its worth collapsed to junk. (Addenda: The German public is boiling with anger because Greece was enjoying a high standard of living without working while tricking creditors to give it easy loans and hiding the fact that it will never be able to pay back its debts). The panic is spreading - the spread on Italy’s debt yesterday rose 30 basis points to 217 points.
European countries are indebted over their heads, their debt can become worthless in a few days. The number would be huge: Ninety billion euros for Greece, 40 billion for Portugal and 350 billion for Spain.
The European MOnetary Union may unravel and a second economic depression may happen. It is not good for America either - panic is an irrational contagion. I am worried. Suddenly, bonds were worth trillions are becoming worthless. Everyone will suddenly become poorer and everything will be worth less. Including my portfolio. I am worried.
9 comments:
Time to buy, when blood is running in the streets.
Anon.
One has to check the volumes of trade too, it may be that the traders are sitting on the sidelines. The prices registered may reflect a lack of market participation, this could be the reason for the elephant spreads.
German insurers fell after Equinet AG cut the shares to “neutral,” saying “we cannot rule out anymore a haircut on Greek government bonds as a part of a debt restructuring.”
Southern Europe's irresponsability is causing a serious problem all over Europe. Even in London they are trembling.
This is the same thing that happened in the US with mortgages - debtors pay until they stop paying. Rating agencies are worthless - their crystal balls are no better than anyone else's. Downgrading debt when the crisis is already apparent is worthless too. The country of Greece is like a homeowner in Detroit who filled out a false loan application and took a $90,000 loan on a $10,000 house. The accumulated wealth of the thrifty person who gave the loan is gone, gone, spend on banker's fees and trinkets for the borrower and it's not coming back.
Greece needs to be expelled from the Euro - they had no business in it in the first place.
K
If Greece is expelled, what about Portugal, Ireland, Spain, Italy and .... Britain?
Britain does not use the Euro.
The PIIGS may have to go also - they are also places that had no business using the Deutsch Mark as their currency. If you recall, Argentina tried using the US$ for a while and that didn't work either. Shady countries NEED to have control over their monetary policy - inflation is the only way they can fool their own idiot voters by paying them pensions in inflated currency. You can't pay for airy promises with hard currency - it just doesn't work.
K
Ecuador is as shady a country as any and is using the US dollar as currency. The consequence is fiscal restraint or default. Ecuador is on the edge of default...
I think the best these peoples could do is to hire Canadian governance consulting services. A few years ago a third world country could outsource the administration of a government branch, one especially corrupt like the Oil Ministry, to a Canadian public company. They were honest and capable and provided good governance.
Maybe it was a dream.
You would have to want good governance. People like good governance for other people but not when it affects their interests. Greek taxi drivers were striking because they were being required to put in meters so that they would have to pay taxes on their recorded income. They preferred bad governance when it was possible to cheat on their taxes. Having your oil ministry run by honest Canadians is good unless you are IN the oil ministry or have dealings with the oil ministry and are benefitting from the current system. The average person might gain a few dollars if their country's oil ministry was not corrupt. Those directly benefitting from the current situation stand to lose millions each. Who do you think will win that battle?
K
Can I get a cite for a Canadian company being able to govern a third world agency? I'm curious and incredulous.
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