Indeed. Perhaps when the fate of the $60 trillion bond market rest on one Facebook status update, it is time to officially call it a day?
Indeed. Perhaps when the fate of the $60 trillion bond market rest on one Facebook status update, it is time to officially call it a day?
Good that PMH has Angelo Persichilli to translate for him.
Italy’s bonds now yielding almost 7%. No one will lend them money unless they pay 7%.
I always wondered how Politicians would ever raise interest rates without getting creamed at the polls and by the media. Could it be that, at the end of the day, the Politicos will have no say in the matter?
Do I have this right?
If so many govt’s are borrowing huge amounts of money and having to pay high interest rates to get it, the everyday saver will want more than the miserly 2% the Federal Banks say they should get at their bank. If enough people say no to 2% and take their chances with much higher interest rates, the Feds will have no choice but to raise their (and the corner bank’s) rates – regardless of what the political class says.
Do I have this right?
At some point there will be more people who are convinced that the rescue of the Euro is doomed than there will be that it can be saved. When that happens the media or financial equivalent of the turbulence of butterfly’s wings will be all that it takes for the implosion to happen.
It sure feels to me that that will be sooner rather than later – perhaps before xmas.
As for the 7% number on Italy’s debt – that is not the number to watch IMO. Rather it is the Rate on German bonds. As the German rates are by definition tied to the mast along with Italy and the other PIGS members being part of the Euro – as go the Italian rates so goes the German rate. And at some point Germans will cut themselves free of that mast and leave Italy, pigs, and the French banks to their fates.
Gruesome, violent, painful consequences will be the inevitable result for millions for years to come…
It’s true, the world is run by crazy people. Sadly though, nearly six years ago you were wrong about the MotherCorp (CBC) being in its death throws. It’s still around and more gay than ever. I used to love CBC. I hate it. George Popagaywhateveravitch can’t even interview Kermit the Frog without making sure the MotherCorp’s gay agenda is upheld. Off topic? Yeah, I know but there was no way to comment on http://www.smalldeadanimals.com/archives/003497.html
IMO – the defeat of Fascism in ’45 spelled the end of the perception of that ideology as a viable option for governance. 11/9/89 the wall fell and with it the perception of communism as being a viable option. The calamity that lies ahead for Europe will spell the end of communism’s more passive sister – socialism and the welfare entitlement state as a viable option.
It seems to me that from this rubble the only option will be democracy founded upon market principles.
The desire of humans to feel secure is a natural one. The above options of governance save the last one promised security via a third party. those promises were unsustainable. market-based democracy offers none of that third party promise of security and thus is viewed as a scary option by many – especially if they have been living in the comforting hold of the government for years – in some cases generations.
But the cold, hard unpromising world of the market is the only enduring thing. The quicker these countries and their citizens come to that realization and align their economies for that truth the better.
It will be a hard-earned lesson.
I wish them (and us) godspeed.
Ron in K:
Actually no – the fed will not have to raise rates to hold onto the capital. When Europe begins to unravel – rates zooming above 7%, there will be a torrent of money fleeing to the safest harbour in the world – US treasuries backed in full by the US military and it functioning democracy and relatively transparent financial markets (note that china lacks both of the latter).
The real concern is what will happen to Canadian rates and more specifically Quebec, Ontario and other have-not province’s rate for borrowing? Should there be a run-up on those highly indebted provinces the federal government may have to take some very draconian measures to maintain confidence in the Canadian economy.