The (Near) Imminent Collapse Of The (Southern ) Euro

[mccw]

my bond rate comment was based on what I saw on BBC business bulletin recently; I'm reasonably confident I didn't just imagine it.

Eitherway; do you really think that if debts basically become shared across the eurozone markets will price them at Germanys current rates? More like a medium between best and worst.

Naam- A more appropriate opening remark might have been "I think u might be mistaken" or "could I draw your attention to......"

[mccw]

Totally misread those numbers; then followed the link and saw it in clarity. Oops.

Perhaps the day I saw it was the first time they had peaked over uk and hense the story. Would u care to dig up the charts for the past week or 2 for me? Help me determine if it's my marbles or memory playing up be much appritiated

Edited December 16, 2011 by mccw

[thaimate]

my bond rate comment was based on what I saw on BBC business bulletin recently; I'm reasonably confident I didn't just imagine it.

Eitherway; do you really think that if debts basically become shared across the eurozone markets will price them at Germanys current rates? More like a medium between best and worst.

Naam- A more appropriate opening remark might have been "I think u might be mistaken" or "could I draw your attention to......"

I am afraid that NAAM is of the opinion that only he knows what is going on and if you do not agree with him ,you are a fool.

[Naam]

my bond rate comment was based on what I saw on BBC business bulletin recently; I'm reasonably confident I didn't just imagine it.

Eitherway; do you really think that if debts basically become shared across the eurozone markets will price them at Germanys current rates? More like a medium between best and worst.

Naam- A more appropriate opening remark might have been "I think u might be mistaken" or "could I draw your attention to......"

I am afraid that NAAM is of the opinion that only he knows what is going on and if you do not agree with him ,you are a fool.

don't be afraid, because all yada yada yakety-yak, wild assumptions/claims and unsubstantiated personal attacks do not beat facts, e.g. government bond yields published and updated daily several times by Bloomberg and ThomsonReuters.

facts are not opinions. and there's no need to agree that "two plus two equals four". but those who doubt that "two plus two equals four" are indeed fools.

p.s. when i mention facts i substantiate them if possible instead of something "reasonably confident based on my imagination".

[RAZZELL]

http://www.spectator.co.uk/coffeehouse/6424283/question-how-much-do-we-contribute-towards-the-eu-budget.thtml

http://www.telegraph.co.uk/news/worldnews/europe/6198708/EU-costs-Britain-118bn-a-year.html

RAZZ

Edited December 16, 2011 by RAZZELL

[mccw]

http://www.mindfulmoney.co.uk/wp/shaun-richards/uk-gilt-yields-below-german-bond-yields-show-that-the-price-of-being-in-the-euro-is-rising/

Knew I wasnt imagining things. But I concede I may not have been bang up to date.

[mccw]

Naam - do u ever ingage in reasoned debate or just try to score points an pull people up on their language ? Come on; reply to some of my points; I'd love to hear opinion from such an informed up to date fellow.

[theblether]

Naam - do u ever ingage in reasoned debate or just try to score points an pull people up on their language ? Come on; reply to some of my points; I'd love to hear opinion from such an informed up to date fellow.

Ignore naam, you will have noticed that he also had a go at me earlier and he has been notable by his silence since I asked him a question that he couldn't, or wouldn't answer. He is a self described Old Master, and I wonder why would an Old Master bait other members of the forum with dismissive and foolish comments. Just like Germany he is a very naughty star member and he really is going to get himself a reputation of being an Old Master baiter soon.

However, to be fair to naam, he does have a greater than average knowledge of matters financial, and he most certainly knows his way around Google. So maybe now he can answer the original question that I asked of him........

Quoted from post 169

"Please tell this poor little blind mouse how the Germans are going to force the bond markets to lend to bankrupt economies?"

Edited December 16, 2011 by theblether

[theblether]

my bond rate comment was based on what I saw on BBC business bulletin recently; I'm reasonably confident I didn't just imagine it.

Eitherway; do you really think that if debts basically become shared across the eurozone markets will price them at Germanys current rates? More like a medium between best and worst.

Naam- A more appropriate opening remark might have been "I think u might be mistaken" or "could I draw your attention to......"

Your going in the right direction with your thinking however naam is correct with his figures. There is an underlying issue which is interesting. I believe it was Thomson Reuters last week that reported there was a "magic" at work in regards to the valuation of the Euro. That magic is relevant to the bond figures.

The magic is ( most likely ) that investors are banking on the fact that one of two things are likely to happen, one being that Germany will see sense ( in their eyes ) and effectively underwrite the Euro. With the strength of the German economy that would be enough to take the heat out of the situation for a long time to come, and at the same time give the new protocol about balancing budgets etc ( as discussed last week ) time to kick in and take effect.

However in the event of the Euro breaking apart, or at least shedding the most highly indebted nations, it would mean that Germany in of itself, and the core nations, would be in a very strong position. They would no longer be obliged to support and bailout these failing economies.

So the German government bonds are still being traded at a very low rate, as the market reckons if the worst came to the worst, Germany would be able to cover it's obligations no problem. I agree with that. However this is where the Financial Reality and Political Reality diverge.

The German government is emotionally and irrationally committed to the Euro. The Euro from inception was an idea born of politics, not of markets. The politics now dictate that German politicians are currently in a position where they have to protect the Euro project at all costs. However they don't want to pay the price.

The price is, the Germans must 100% guarantee the Eurozone debts...........if they do so then the level of financial commitment they put behind the project is so colossal that they, even with their economy booming, will become a riskier investment for the bond markets, therefore the premium on bonds will go up.

The best way to put it is, if your son came along and asked you to guarantee his loan to buy a car, you would do so. Your son pays the car, and that's no problem. However if you decide that you would like to buy a car too, you would have to declare to the finance company that you were a guarantor on your sons car. Basically, you have eaten up some of your credibility by helping out your son.

If Germany has to guarantee the debts of Greece, Ireland, Portugal, Spain, Italy etc, then they have seriously eaten into their credibility, and the price of bonds will move higher, therefore the cost of borrowing moves higher, therefore economic activity starts to stagnate, therefore we all go hell in a handcart.

So, German bonds today are trading cheaply..........based upon the strength of their economy. What they have to decide now is what is more important...........the economy, or political dreams.

[mccw]

^ I largely agree with you except 2 key points.

1 - I think it unlikely Germany could afford to underwrite all the euro debts; more money more problems, end point being collapse of entire eurozone and possible meltdown.

2 - a break up of euro; rather than emerging strong group being fine and better, because of the banks exposure to the med countries, infect there is credit/ banking crises, possible total meltdown.

These senarios to me unfortunately look more probable than the optimist side; which is the side your describing and what the trades are currently based on. What I'm saying is that over the next year or two markets will start to really realise how bad the situation is, abandoning government bonds and shares and instead heading for physical assets.

I realise ofcourse I could well be wrong and I sinserly hope

I am as my property business will make me more than my physical gold or silver stack might- the stack is just there incase of Armageddon , not for the sake of profiteering.

But really the the whole house of cards looks ready to fall with a flap of a butterflies wings

[mccw]

Mostly I talk about middle point between optimist and armagedon; total meltdown is incomprehensible to most people. Another deeper recession followed by 5-10 years low growth is that senario. Fingers crossed hey. The optimist route , even if coming true, would actually be a negative because commodity inflation would go through the roof and soon crush the bull.

[RAZZELL]

A useful guide:

http://www.telegraph.co.uk/news/interactive-graphics/graphic-of-the-day/8868729/Graphic-European-debt-crisis-explained.html

RAZZ

[mccw]

C the French now talking like little bitchez; they must be real shook !

[mccw]

French have double GDP growth than uk, practically the same gov debt burden, yet pays significantly more for it borrowing- what does that say about Market confidence in nations directly exposed to the euro? No stomach for reforms doesn't help them either.

[JurgenG]

Just my opinion, for what it's worth.

Who want a quick solution to the current European crisis ? The USA because of the election. The UK because of their over dependance of the financial markets.

Now on the other side. 2012 will also be an election year for France but from the headlines, the Euro crisis doesn't rank very high compared to some other local issues. And for Germany ? No real exposure to the financial markets, that's why they weathered so well the previous crisis. A too quick resolution of the current crisis will see the other European countries trying to renegotiate what has been accepted when even closer political and economical union is needed.So basically, if Merkozy want to achieve their goal for Europe, it's not in their interest for the crisis to be over too soon.

Now It's Xmas, nothing will happen. See you in March.

Edited December 16, 2011 by JurgenG

[Naam]

Ignore naam, you will have noticed that he also had a go at me earlier and he has been notable by his silence since I asked him a question that he couldn't, or wouldn't answer. He is a self described Old Master, and I wonder why would an Old Master bait other members of the forum with dismissive and foolish comments.

Honourable Sir Blether, Esq.;

did you really not understand "brushstroke of an old master's painting" or are you just malevolently twisting my words as you did before several times? if you don't understand a simple parable (which is quite often used in a proverbial way) you have my sympathy

[Naam]

my bond rate comment was based on what I saw on BBC business bulletin recently; I'm reasonably confident I didn't just imagine it.

Eitherway; do you really think that if debts basically become shared across the eurozone markets will price them at Germanys current rates? More like a medium between best and worst.

Naam- A more appropriate opening remark might have been "I think u might be mistaken" or "could I draw your attention to......"

MCCW,

i thought my comment "reading glasses broken?" was a friendly one ending with a smiley. especially because they were directed at a Brit in who's country black humour was developed. however, i am willing to use in future phrases similar to those you mentioned above if the comment is presented, e.g.

"i think / was told / heard some news / could i draw your attention to / that... German government bond yields are higher than those of the U.K."

instead of a claim ending with an exclamation mark, e.g.

German bond rates are already more than the UKs; and it's early days still!

[Naam]

Why is a uk gov 5 year bond returning 1.75 while the six year is at 5.0?

i am tempted to use my reading glasses comment again but limit myself to

"may i humbly draw your attention to the fact that you might be slightly mistaken MCCW? after carefully examining the alleged discrepancy i arrived at the conclusion that that this is not really the case." :jap:

5-Year 1.750 01/22/2017 103.15 / 1.12 -0.240 / 0.047 11:59

6-Year 5.000 03/07/2018 121.74 / 1.35 -0.290 / 0.042 11:59

return/yield is marked red.

it took me quite a while to figure out where your 1.75 and 5.% belong to. they refer to the nominal coupon (marked blue) which has no bearing on return/yield if not calculated/considered in relation with the price. when this is done you can see that the difference is only 0.23% which is in line with the difference in maturities.

if you are really interested how that calculation is done i am willing to elaborate and explain it with two examples. by the way, you are not the only one who might be confused by the seemingly discrepancy of nominal coupons but nearly identical yields. it's quite normal for people who are not familiar with bonds and yield calculations.

[mccw]

^ try reading all the posts before commenting; I had already corrected myself.

Still no response to the subject at hand; remember- "the near imminent collapse" ?

[mccw]

^ try reading all the posts before commenting; I had already corrected myself.

Still no response to the subject at hand; remember- "the near imminent collapse" ?

[Naam]

^ try reading all the posts before commenting; I had already corrected myself.

Still no response to the subject at hand; remember- "the near imminent collapse" ?

i'm not sure whether you are addressing me. but should you then my answer is "why should i waste my time with obvious laymen who don't have the guts to admit their ignorance but resort to arrogance and diversions when i try to help out with explanations?" it's not a shame if one is not familiar with each and everything. i'm an old hand as far as finances are concerned but there are a zillion things in finance and investment of which i have no bloody idea and i freely admit that fact.

actually i should "of" refrained from posting in this thread after "offing" read the first dozen postings

[elliss]

"the near imminent collapse" ?

SKY NEWS ,

today the credit rating gency Fitch said,

it was giving france a negative outlook ,

after the rhetoric of french prime minister francois fillon, over the euro zone crisis .

i think we can expect the artificial high of the euro to gradually fall.

you have been warned .

:jap:

[JurgenG]

"

SKY NEWS ,

today the credit rating gency Fitch said,

it was giving france a negative outlook ,

after the rhetoric of french prime minister francois fillon, over the euro zone crisis .

i think we can expect the artificial high of the euro to gradually fall.

you have been warned .

:jap:

I think we should get used to it,

What the rating agencies are saying is Europe is not anymore friendly to the big banks.

But should we be slave, live in fear of the big banks ?

Beside 1.30 to the US doesn't make any sense. The US had a good time with their totally unfairly low currency, they should be ready for a more realistic exchange rate

[theblether]

Ignore naam, you will have noticed that he also had a go at me earlier and he has been notable by his silence since I asked him a question that he couldn't, or wouldn't answer. He is a self described Old Master, and I wonder why would an Old Master bait other members of the forum with dismissive and foolish comments.

Honourable Sir Blether, Esq.;

did you really not understand "brushstroke of an old master's painting" or are you just malevolently twisting my words as you did before several times? if you don't understand a simple parable (which is quite often used in a proverbial way) you have my sympathy

Your nasty piece of work that feels the need to massage your ego by trying to belittle others.

So why don't you just answer the question..........How will Germany force the bond markets to lend to bankrupt economies?

[mccw]

What the rating agencies are saying is Europe is not anymore friendly to the big banks.

But should we be slave, live in fear of the big banks ?

USA is most friendly to the big banks yet they suffered a down grade already. I think the probable wave of upcoming European downgrades will be more to do with political constipation, risk and debt buurden and resultant future outlook.

Ofcourse we should not live in fear of the banks; however it is the case that they are essential for current system to keep functioning. The trick will be to keep cards standing while slowly regulating the more absurd and risky practices that the banks etc are involved in. Taking on the banks / markets directly would propably result in collapse as real or perceived ( and there for just as real) risk is deemed so great that credit and bonds etc drive things beyond governments control.

The way I look at it is - we're stuck in the game and it needs to be played from within; the only other way, which may come about anyway, is accept collapse, deal with the anarchy, shortages etc etc and rebuild a new system.

[mccw]

The uk are about to be separating retail and "casino" investment banking. This is a practical solution to avoid bailing out in the future while allowing profits to be made in a sector which can benefit the economy so long as when they do get it wrong they are allowed to go bust. The eurozone just want an extra tax (mostly at Britians ecpencr) to fund their systemic failures. The blatant thievery and lack of law enforcement in America looks to me to be the biggest threat to the game as we know it. Sooner or later people will start pulling money out of their account on a massive scale; if they don't start taking serious action such antic will escalate.