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Europe is falling apart---close to bringing the whole world down.

Discussion in 'BBS Hangout: Debate & Discussion' started by Northside Storm, Nov 9, 2011.

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  1. Invisible Fan

    Invisible Fan Member

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    I haven't read anything much outside here, but I'm guessing "disorderly" default is the key word here.

    Prop it up by socializing some losses, let the bigger fish evacuate, hair cut some pension funds and pretend Capitalism's finest tools and innovations are efficiently and orderly sorting out various classes of creditors, stakeholders, and casino gamblers, while everyone who is worth something's accountants cook each of their books for rounding errors.

    Not to say that it's some elitist scam or conspiracy, but rather how the process has been organically designed (more or less) with past events as precedents. Governments do it to prevent more dominoes from spiraling down and at the same time buy everyone some more time in an increasingly digital era.

    I don't even understand most of how the "shadow banking" system/theory works so I can't even fathom to think how OWS can begin piecing it together.
     
    #21 Invisible Fan, Nov 9, 2011
  2. Major

    Major Member

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    I think that's pretty easy for Greece. But Italy, for whatever goofy reason, is the 3rd largest bond issuer in the world, behind the US and Japan. So there are just too many bonds to smoothly fix things.

    What Italy does have going for it, however, is that their budget isn't out of whack. They actually run a somewhat balanced budget outside of interest payments, so they aren't in the same mess as Greece was in, which was a death spiral of being unable to pay bills. Italy has a lot of debt, but not a big deficit - which is amazing and weird, from what I can tell.
     
    #22 Major, Nov 10, 2011
  3. ChrisBosh

    ChrisBosh Member

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    Hope this works, its a cool little interactive tool from http://www.economist.com/blogs/dailychart/2011/11/debt-dynamics-0

    <object height="390" width="595" >
    <param name="movie" value="http://media.economist.com/sites/default/files/media/2011InfoG/Interactive/Debt_dynamics_20111101/debt_dynamics.swf">
    <param name="allowFullScreen" value="true">
    <param name="allowscriptaccess" value="always">

    <embed type="application/x-shockwave-flash"
    src="http://media.economist.com/sites/default/files/media/2011InfoG/Interactive/Debt_dynamics_20111101/debt_dynamics.swf"
    allowscriptaccess="always"
    allowfullscreen="true"
    width="595" height="390">
    </object>


    Awesome explanation on how the model works in the link above, gives an explanation about the important factors in government debt.
     
    #23 ChrisBosh, Nov 10, 2011
  4. Raven

    Raven Member

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    The center will not hold, globalism is dying, and small scale local economies are the future, whether the banking elite like it or not.
     
    #24 Raven, Nov 10, 2011
  5. rhadamanthus

    rhadamanthus Member

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    Another big problem is the European Central Bank which, like the IMF, is only interested in controlling inflation - economic recovery be damned.

    Let's hope the new guy changes course a little.
     
    #25 rhadamanthus, Nov 10, 2011
  6. glynch

    glynch Member

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    They either need a greater politcal union or they probably need to get rid of the Euro. Germany must be just as bound to bail out Greece as Calfornia is to bail out Louisiana after Katrina or whatever calamity, whether humaintarian or economic.
     
    #26 glynch, Nov 10, 2011
  7. RedRedemption

    RedRedemption Member

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    Globalization will **** us over.
     
    #27 RedRedemption, Nov 10, 2011
  8. Northside Storm

    Northside Storm Member

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    Looks like things are stabilizing a bit, as Greece and Italy have been pushed back from the cliff thanks to quick political decisions, and the ECB rushing into the rescue.

    Still, reading between the lines, things are still not looking very good.

    Italy Pays Euro-Era High in T-Bill Sale

    http://online.wsj.com/article/SB10001424052970204358004577029533743156496.html

    If the ECB starts printing en masse, you can expect the Germans to be rankled. That's the only way to sustain the situation.

    France and Spain are now in the firing line as well.

    http://www.investmentweek.co.uk/inv...france-spain-firing-line-spreads-hit-euro-era

    How does this affect the average American?

    God forbid, if there is a disorderly default for Italy, Spain, or a combination of the periphery states, or even just significant haircuts, and downgrades of France and French banks, it will make 2008 look like a candy shop.

    Remember Lehman Brothers as a "credit event"? With how interconnected the bank system is, if you're talking about major countries---the third largest bond market in the world, going down---you're talking about a mess and a half. Credit lines will freeze up again. American banks exposed to credit-default swaps (about $500 billion exposure according to estimates) will suffer. Whoever is the counterparty on those stupid deals will go down, and be unable to pay out. It will be AIG/subprimes all over again, except on a bigger scale---and with most countries unable to stimulate their economies back from the brink, thanks to record debt levels.
     
    #28 Northside Storm, Nov 10, 2011
  9. Northside Storm

    Northside Storm Member

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    One of the major issues with the European bond markets is that it seems like investors are punishing countries on a purely psychological basis. Italy is paying for the sins of its' past, because if you look at it deficit-wise, it's actually one of the best performers in the Eurozone. For one reason or another, that doesn't reflect in the yields, which are in of themselves single-handily causing a vicious cycle where people think Italy is riskier---which means they demand higher yields---which pretty much is the only thing that DOES make Italy riskier---and etc.

    Prolonged stays in the 7% range, and increased suspicion of CDS, can quickly play into a death spiral as we saw in Greece, with the fundamental difference that Italy can manage somewhat better...but also with much higher stakes than Greece ever could bring to the table.

    The ECB is doing its' part by piling on weak European debt---but I worry.

    That was in July. Now, I imagine, it would be something much more drastic.

    Of course, a bank that can print money will never go bankrupt, per say. A fundamentally anti-German printing press looks inevitable though, and the problems that will bring are, in of themselves, more than a bit worrying.
     
    #29 Northside Storm, Nov 10, 2011
  10. coolweather

    coolweather Contributing Member

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    <object width="420" height="315"><param name="movie" value="http://www.youtube.com/v/2xB4dbdNSXY?version=3&amp;hl=en_US"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/2xB4dbdNSXY?version=3&amp;hl=en_US" type="application/x-shockwave-flash" width="420" height="315" allowscriptaccess="always" allowfullscreen="true"></embed></object>
     
    #30 coolweather, Nov 10, 2011
  11. pgabriel

    pgabriel Educated Negro

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    embrace globalization
     
    #31 pgabriel, Nov 13, 2011
  12. Mathloom

    Mathloom Shameless Optimist

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    [​IMG]

    Globalization :)
     
    #32 Mathloom, Nov 14, 2011
    Last edited: Nov 14, 2011
  13. Northside Storm

    Northside Storm Member

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    Things are starting to unravel.

    Dow went down loads this week (made a pretty penny on shorting incidentally)---from 12,000 to about 11,300.

    Not surprising given the boatload of bad economic news---mostly from Europe.

    Even China's joining in the act---

    The Economist sums it up nicely---

     
    #33 Northside Storm, Nov 24, 2011
  14. Northside Storm

    Northside Storm Member

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    not one to crow about 2012, but we certainly are trying really hard to make 2012 shimmer.
     
    #34 Northside Storm, Nov 24, 2011
  15. AroundTheWorld

    AroundTheWorld Member

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    Ever considered that you might be part of the problem? :)
     
    #35 AroundTheWorld, Nov 24, 2011
  16. Mr. Clutch

    Mr. Clutch Member

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    The Euro currency union should have the following countries in it:

    Germany
     
    #36 Mr. Clutch, Nov 24, 2011
  17. Northside Storm

    Northside Storm Member

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    I'm a minnow in a sea of institutional whales.

    Though I regret proposing the European Union. I was drunk at the time though, please excuse me.
     
    #37 Northside Storm, Nov 24, 2011
  18. SamFisher

    SamFisher Member

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    I imagine you were DUCKING and SLIDING these market turns, LIKE A GOD, no, Macky-B?
     
    #38 SamFisher, Nov 24, 2011
    1 person likes this.
  19. Northside Storm

    Northside Storm Member

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    well, literally speaking, a lot of what I do with this involves staring at a screen and not sleeping, so if that's considered ducking and sliding, so be it
     
    #39 Northside Storm, Nov 24, 2011
  20. AroundTheWorld

    AroundTheWorld Member

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    Wow...you really might be on to something there.

    Sensationalist thread titles, attention-whoring, long-winded posts, from Canada, using multiple outlets (blogs, other forums) to seek attention, talking left, but claiming to have made a profit by shorting, etc., etc....

    Kudos to you, Mr. Fisher.
     
    #40 AroundTheWorld, Nov 24, 2011
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