tag:blogger.com,1999:blog-3198915255127038100.post9100297045544262441..comments2023-09-01T05:27:58.305-04:00Comments on The Hourly G: Speed Bump in the Euro-pocalypse—It’s Portugal!Gonzalo Lirahttp://www.blogger.com/profile/10596675676272535336noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-3198915255127038100.post-6389375656422861792011-01-10T14:00:50.090-05:002011-01-10T14:00:50.090-05:00Europe is not unlike the various states in America...Europe is not unlike the various states in America, most are insolvent.<br />California is the 8th largest economy in the World, about the same size as France. And California is Broke.<br />Portugal is #50 on the list of GDP countries. And at $2.5B it seems rather small when compared to California’s $22.2B fiscal hole.<br />It is known that 43 of the 50 states in America are in a financial mess. And what about the Federal Government, that’s an even bigger mess.<br />Italy is #11 GDP at $1.7T with a population of 60 million<br />Ireland #57 GDP at $172B with a population of 6.2 million<br />Portugal #50 GDP at $2.5B with a population of 11.3 million<br />Greece #35 GDP at $333B with a population of 11.2 million<br />Spain #14 GDP at $1.359T with a population of 46 million<br /><br />California’s GSP is $1.85T with a population of 37 million<br /><br />The Euro is in a mess, but less so than the dollar. Individual Euro PIIGS might resort back to their pre Euro currencies, but what can the USA do? <br /><br />European countries are implementing austerity measures, but what is the Fed doing? It continues to print (create more debt).<br /><br />Undoubtedly, it is not going to be a walk in the park for European countries in getting back into fiscal fitness, but it will happen, and it will be less painful than it will be for US citizens. This link gives a perfect illustration: http://www.guzer.com/pictures/europe_vs_usa.jpg<br /><br />There is only so much lipstick to go around, which pig would you prefer to paint?Andy Shandnoreply@blogger.comtag:blogger.com,1999:blog-3198915255127038100.post-4561336668370004292011-01-10T12:17:45.531-05:002011-01-10T12:17:45.531-05:00News from the European Sovereign debt front can in...News from the European Sovereign debt front can indeed be expected to be entertaining this year.<br /><br />Still, one important point should be kept in mind... especially about comparison between Euro and US Dollar.<br /><br />The chance that I will still be able to buy anything with euro here in France ten years from now is slim ("What is this banknote? We use francs here, Monsieur!"), BUT the euro remains nonetheless long term a much better long term store of value than the US dollar, and probably also than the British pound. <br /><br />One who has 1,000 euro on a bank account runs a significant risk that at some point in the future he will discover this money has suddenly been morphed to 1,000 new francs, or new marks, new liras or whatever... Yet he is likely in the long run to keep a much greater part of the purchasing power of this money than if he had exchanged it for US dollars. Even if he eventually finds himself with 1,000 new pesetas! (the new drachma may be an exception to the rule however, since Greece is the only EU country whose financial picture is about as discombobulated as America's)<br /><br /><br />By contrast with the US Federal Bank and the Bank of England, the ECB DID NOT multiply its balance sheet by a factor 2.5 to 3 in the last two years. Nor is the ECB monetizing 60% of European public deficits, like the Fed is doing for America. If it was doing so, there wouldn't have been any talk of any European sovereign crisis! <br /><br />It is not because of virtue, not even because of common sense, but because of political factors: that the EU is a federal superstructure floating upon an ocean of nations rather than a nation the like of US or UK, that Germans have a "long memory" about the consequences of runaway money printing (re: 1923). And the severe limitation in Euro's QE makes it more difficult to hide financial problems under a carpet of politically motivated T-Bonds (or Gilt) purchases... which is overall a very good thing, of course. At least in the long run. For the short run, well :-( ...<br /><br />The alternative would be to take public control of the sovereign debt market, suppress market forces, like Bernanke is doing. Then everything remains under the carpet... until the disaster, as you have clearly underlined, GL.<br /><br />If I'm still of this world in 2020 and I fly to New-York, I would expect to buy a coffee at the airport, which would cost me 20 dollars... that is 5 francs, or 4 marks.Alexis from Francenoreply@blogger.comtag:blogger.com,1999:blog-3198915255127038100.post-23046134337156755412011-01-10T08:55:57.594-05:002011-01-10T08:55:57.594-05:00Hey JMA—
Something to look forward to—but frankly...Hey JMA—<br /><br />Something to look forward to—but frankly, I wish they’d get this movie over with: Go forth with the Euro-pocalypse once and for all. This endlessly stretching it out is getting on my nerves. <br /><br />Cheers,<br /><br />GLGonzalo Lirahttps://www.blogger.com/profile/10596675676272535336noreply@blogger.comtag:blogger.com,1999:blog-3198915255127038100.post-19073226664230899672011-01-10T08:33:32.193-05:002011-01-10T08:33:32.193-05:00A big test for Portugal will come Wednesday when t...A big test for Portugal will come Wednesday when they auction €1.25 billion in five and ten year bonds. After Friday's auction, it appears that the EMU is trying to prevent a panic in the bond markets this week. A bailout will keep rates low and the spread between Portuguese and German yields will narrow thereby kicking the can a little further down the road.JMAhttps://www.blogger.com/profile/12047024746634967648noreply@blogger.com