Eurozone debt crisis

[mulberryhawk]

Its just that I noticed that Italys debt to gdp ratio is up with Greece at nearly 120%, and Belgiums is up at around 96% with Ireland.

However the bond rates on these countries are relatively low in comparison to the Greek and Irish rates. Is it the large government deficits that these countries are running that is the real problem, and if thats the case with the Uk deficit on par with greece and with growth rates being downgraded ,what are the implications for UK bonds if any?

[superfrank]

I guess they think that Belgium have more hopes of recovery and being able to survive within the Euro. That's the real problem - the southern European countries don't have a hope of matching German productivity and yet share the same currency. It was masked for a while by debt-based growth and property bubbles (and fraud in the case of Greece), but it was always going to be unsustainable in the longer term.

The UK will have its turn...
http://ftalphaville.ft.com/blog/2011/05 ... p-trouble/

[superfrank]

Greece default risk at 50:50 says Moody's
http://www.bbc.co.uk/news/business-13625084

Greece's credit rating has been cut again by rating agency Moody's.

Moody's cut its rating by three notches from B1 to Caa1 - just five notches short of default.

The new rating means Greece is 50% likely to default on or restructure its debts in the next five years, according to Moody's methodology.

I'd put the likelihood at roughly 100%! They, like many other countries, are in a compound debt spiral - it is only wishful thinking keeping the PIIGS afloat.

[Iron]

ECB's Trichet pushes for a European finance ministry - http://www.telegraph.co.uk/finance/econ ... istry.html

*Puts head in hands*

You don't put a fire out by throwing petrol at it!

Jeff

[CaerMyrddin]

Well, things can't be as they are, so Europe must do something. Whether it's deepening the Union or stepping back, that's the question

[Iron]

Well, things can't be as they are, so Europe must do something. Whether it's deepening the Union or stepping back, that's the question

I agree - it's a question of when, not if...

Jeff

[superfrank]

UK investors in bonds battle
http://www.bbc.co.uk/news/business-13731997

A lot of small investors are losing out to protect the Irish tax payer.
- John Hemming, MP, BOI bond holder

Damn right they are. Bonds return a yield because of the risk of default - that's the whole point of bonds! I assume Mr Hemming bought Irish bonds, directly or indirectly, because of the higher yield, yet expects a foreign government to bail him out now his bet has failed.



Ireland Seizes $7 Billion From Its Pension Fund To Boost Employment
http://www.businessinsider.com/ireland- ... ent-2011-6
Robert Maxwell would approve.

[Iron]

Greek Parliament Preparing Evacuation Tunnel Ahead Of Wednesday Vote On IMF Bailout, General Strike And Parliamentary Blockade

http://www.zerohedge.com/article/greek- ... ral-strike

[superfrank]

Niall Ferguson Says 100% Certain Greece Will Default
10 min video - http://www.washingtonpost.com/business/ ... video.html

[Euler]

It's really hotting up in Greece.

EU commissioners have a "profound sense of foreboding" about Greece and the future of the eurozone, a leaked account of a meeting has suggested.

The account, seen by BBC News, said this was in reaction to the "damning failure" of eurozone ministers to agree a new bail-out for Greece last night.

It was written by an official who attended Wednesday's gathering of commissioners in Brussels.

The author warned that the markets would now "smell blood".

http://www.bbc.co.uk/news/business-13781390

[Euler]

This is the problem with such massive debts. The Greek populace just doesn't want to take the medicine and that looks likely to cause default. The consequences of not taking the medicine though are severe.

[Euler]

Debt-laden Greece mired in anger and humiliation

http://www.bbc.co.uk/news/world-europe-13779062

[mulberryhawk]

Is it just me who feels uncomfortable about the prospect of the EU and the IMF demanding that Greece sell off the family silver. I mean the prospects of selling off valuable trading ports, national energy companies and islands seems almost, like without wishing to sound too dramatic , like a form of slavery (especially for future generations).

I mean how many public and private companies are allowed to go bankrupt without so much scrutiny. Am I missing the point here or being too nieve. Surely a default is a more rational solution.

[Iron]

Is it just me who feels uncomfortable about the prospect of the EU and the IMF demanding that Greece sell off the family silver. I mean the prospects of selling off valuable trading ports, national energy companies and islands seems almost, like without wishing to sound too dramatic , like a form of slavery (especially for future generations).

I imagine the Greeks feel the same way about it as we would if we were forced to sell Buckingham Palace to a foreign company...

But I'm not sure there's a better alternative, sadly. Yes, Greece could default, but putting issues of honour aside, that could have serious consequences for the world economy if it triggers another banking crisis.

Jeff

[Euler]

Nice to see the UK is doing it's bit to reduce it's debt but we are not cutting enough to really have a significant impact. While the private sector has had it's pension decimated it's only fair to see public sector pension come down a bit as well. I saw a report somewhere that said the pension deficit in the public sector could be as high as £1t!

http://www.bbc.co.uk/news/uk-politics-13772326