Spain and Italy next?

Finnbar01

It looks like Spain and Italy are going the same way as Ireland, Greece and Portugal.

Could someone post in detail what exactly would happen if Spain or Italy were to require a bailout. I've been hearing that the euro is definately finished if that happens.

Any takers?

Cheers.

tsoparno

i saw a graph on their debt a while ago and it seems that its italy's debt is worse than any other of the piigs.there'll be no saving them(or us) its that big.

Gumbi

Ireland can't possibly pay back its debt. It'll have to be cancelled eventually. It will be cancelled, no doubt.

Debtocracy

Poor Barrosa looks like he's seen a ghost :eek:

Tora Bora

Finnbar01 wrote: »

It looks like Spain and Italy are going the same way as Ireland, Greece and Portugal.

Could someone post in detail what exactly would happen if Spain or Italy were to require a bailout. I've been hearing that the euro is definately finished if that happens.

Any takers?

Cheers.

But why don't they do like Ireland, and "turn the corner"?

Nijmegen

Italy has 130% Debt/GDP, higher than Ireland's. Of course, it's a bigger economy with more momentum. But it's showing signs of wobbling. International markets are taking a big dive and their bond yields are approaching the magic 7% bailout area.

Ireland cost pennies to bail out compared to what it'd cost to bail out Spain, let alone Italy.

Hold on to your hats.

Rhys Essien

Italy are 2 TRILLION in debt.:(

View

Rhys Essien wrote: »

Italy are 2 TRILLION in debt.:(

So are Germany (well 1.968++ and going up by roughly 2K per second). Italy actually has a smaller "hole" in its public finances than the other "big 6" EU member states (i.e. France, Germany, UK, Spain and Poland (if I remember their figure correctly)).

thebman

I think this is just the US rating agencies and US media trying to swiftly take attention off the US problems recently.

Well mostly anyway, obviously Italy and Spain are highly in debt but so are most western countries.

Nijmegen

I don't think it's anyone trying to avert attention from the US - if anything, the US gave Europe a respite. Markets just have bandwidth to deal with one bad story at a time, and the US story had a set deadline.

Italy is proposing cuts equal to the size of our entire government spending, and that's not considered enough. Italy has trillions in debt that needs servicing, to be rolled over, and that's before you think 'What would happen if their banking system went the way ours went?'

Like us and Greece, and unlike Germany, Italy has allowed wages to rise and for themselves to become uncompetitive.

The basic, 'Why is this so big?' is because Italy is so big.

Ireland has a GDP of $164.6bn (2010), Portugal $247bn, Greece $310bn.

Italy has a GDP of $2.1 trillion.

Enjoy trying to bail that mother out.

murphaph

I believe the D-Mark II will be my chosen currency in the future.

irishh_bob

i see two things happening

1. the buying up of soverign debt which will involve american style QE , this will weaken the euro which is redicolously over valued anyway ( good for those in the swiss franc or gold )

2. germany ( as the one picking up most of the tab ) insisting on closer fiscal union with complete fiscal union eventually becoming a reality , i really do believe that unless ireland leaves the euro , the days of having our own finance minister are numbered and besides , european fiscal union would be hugely detrimental to our economy in terms of the tax code , thats why i believe ireland would most likely end up no worse leaving the euro than being part of a european superstate which has centralised all fiscal policy , with or without the euro , we would see a cut in incomes ,wellfare but at least with the punt , we could retain our export edge via our corpo tax

ps , ireland leaving the euro would also be good for those with gold

irishh_bob

murphaph wrote: »

I believe the D-Mark II will be my chosen currency in the future.

it would end up stronger than the swiss franc is now , thus killing german exports , the germans are a pragmatic people , they will agree to a euro bond providing they get to dictate spending policy in greece , ireland italy etc , the result will be a weaker euro but without the threat of delinquent states messing things up , germany will benefit in the end by keeping the euro

Fergus_Nash

I heard this morning that the rescue fund for European countries is €440bn with Germany contributing €140bn and Italy €70-80bn. If Italy were to require a bailout there wouldn't be enough money for it unless Germany (and France if it can afford it) puts in more to the fund. The German people won't take to kindly to having to pay more and Merkel, for her own political ambition, won't pump more money into it.

Therefore a new solution will have to be thought up by the Germans, French and the ECB. They have, I'd say, two weeks to come with this and it has to be better than the last deal made two weeks ago. The likelihood of a new, watertight deal that the markets will buy into is very low so I think that by the end of September, the euro will be gone.

Merkel, Sarkosy and Trichet will think up of another deal though, and Kenny will be back in Brussels instead of sunning himself in the west. The deal will probably see Ireland having to default or something like that in an attempt to save the euro. The writing is on the wall for Ireland and we really should just jump the gun and default on our own terms.

Whatever happens, Ireland's debt, as well as the debt of the other PIIGS, will be written off or at least a good bit of it. I have been trying to get my head around this for the past few weeks but this is my version of events. Ireland's banks needed more money during the boom times to keep the Irish people's appetite for cash fed so they had to borrow money from German and French banks, along with the ECB. When the Irish banks, in 2008, couldn't pay back the borrowed money, they were bailed out by the Irish people, thus keeping the the loans paid for.

Fast forward two years and the Irish nation needs a bail out. Hehe here comes the funny bit - the ECB, made up of the French and German banks in the most part, comes in and gives Ireland a bail out. A bail out from the ECB to keep the Irish banks afloat and to pay back the loans to the ECB:D With the euro gone, this debt will have to be written off.

Post Script: if Italy was stable enough to not need a bail out but Spain was not, Merkel would be happy enough to put in more money and see the beginning of the Fourth Reich. However this won't happen:)

later12

murphaph wrote: »

I believe the D-Mark II will be my chosen currency in the future.

There is nothing to suggest that any D Mark 2 will never arise. The Euro and European co-operation are far too ingrained into the world economy to be allowed to fail.

The Euro might fracture or differentiate or even integrate, but it will never be completely wiped from the market or from the European economy.

later12

Fergus_Nash wrote: »

I heard this morning that the rescue fund for European countries is €440bn with Germany contributing €140bn and Italy €70-80bn.

We don't fully know about this yet, we have yet to hear about supersizing the EFSF. Until that happens, or until we are given indications that it will happen, there is a lot of uncertainty about what will happen to the peripherals. About a year ago William Buiter of citibank suggested that the EFSF needed a fund of about €3 trillion, and that sort of figure must now be under examination in Europe.

Zubeneschamali

Every possible patch and can-kicking exercise has to be tried first and seen to fail before the German taxpayers will accept that the Euro is broken, and that they are stuck with the bill for fixing it.

Everyone else will have to accept that they are living in a German-dominated United States of Europe, and their national Governments matter about as much as Leitrim county council.

flanzer

Will the German's remember, that after World War II, their country was decimated, and the Americans took pity on them and wiped off most of their debt? This enabled them to get back firmly on their feet and build an infrastructure no other European country had and give them the economy they have today....

It's time for the Germans to reflect

zig

This situation was so ridiculously predictable that it is getting cringeworthy at this stage. Im sure they'll find another way of kicking the can down the road. And let it build into something even bigger.

Its becoming a joke.

later12

flanzer wrote: »

Will the German's remember, that after World War II, their country was decimated, and the Americans took pity on them and wiped off most of their debt?

Eh, no, probably not, because none of the key European leaders - including Merkel - were around during the war or during the Marshall Plan. In fact, Merkel was born after both had ended.

Europe has moved on from WWII, online finger waggers should do so as well.

later12

After paying less than market rates for 3 and 4 year bonds at auction this morning, borrowing costs for 4 year paper nevertheless came perilously close to 5% at this morning's bond auction in Spain

Not sure how much to make of the fact that Spain has now cancelled it's upcoming bond auction on 18th August.

http://www.rte.ie/news/2011/0804/euro-business.html

It is worth mentioning, for what it's worth (what was it worth to Ireland?) that Spain is fully funded until into 2012.

irishh_bob

later10 wrote: »

There is nothing to suggest that any D Mark 2 will never arise. The Euro and European co-operation are far too ingrained into the world economy to be allowed to fail.

The Euro might fracture or differentiate or even integrate, but it will never be completely wiped from the market or from the European economy.

agreed , the people that matter , wont consciously kill it , a weakening of the currency seems inevitable though

ILikeBananas

Ok, so first it was Greece in May of last year.

6 months later it was us.

5 months later it was Portugal

4 months later.... is now and right on cue Italy is melting down.



So these Euro crises are indeed coming faster and faster.

If they somehow managed to bail Italy out then Spain would be next up almost immediately.

It's time for plan B.

What is plan B?

View

ILikeBananas wrote: »

Ok, so first it was Greece in May of last year.

6 months later it was us.

5 months later it was Portugal

4 months later.... is now and right on cue Italy is melting down.



So these Euro crises are indeed coming faster and faster.

If they somehow managed to bail Italy out then Spain would be next up almost immediately.

It's time for plan B.

What is plan B?

What we have is the plan B.

later12

Don't worry, there are 24 letters left, and that doesn't include all the acute accents, accents graves, umlauts and assorted diacritics before we are finally forced to face up to the final chance to deliver a credible plan for the Eurozone.

Plan B? Early days yet.

LooneyTunes

later10 wrote: »

Eh, no, probably not, because none of the key European leaders - including Merkel - were around during the war or during the Marshall Plan. In fact, Merkel was born after both had ended.

Europe has moved on from WWII, online finger waggers should do so as well.

Oh really. You're obviously not aware of the fact that Germany made it's final reparation payment for World War 1 recently, after 92 years.

http://www.dailymail.co.uk/news/article-1315869/Germany-end-World-War-One-reparations-92-years-59m-final-payment.html

So please, spare me the World War II is ancient history BS.

murphaph

flanzer wrote: »

Will the German's remember, that after World War II, their country was decimated, and the Americans took pity on them and wiped off most of their debt? This enabled them to get back firmly on their feet and build an infrastructure no other European country had and give them the economy they have today....

It's time for the Germans to reflect

As pointed out, the Germans paid down their debts. The real cause of German economic supremacy is.....hard work. No secret at all really. The Germans worked 12 hour days 6 days a week pumping out VW Beetles and such like.

Many other countries also received Marshall aid and never managed to develop the economy Germany did.

Bullseye1

We will need a Euro bond according to wallstreet analyists. I cannot see the Germans agreeing to that unless we have much closer fiscal polices.

later12

LooneyTunes wrote: »

Oh really. You're obviously not aware of the fact that Germany made it's final reparation payment for World War 1 recently, after 92 years.

Yes, Looney Tunes, like most of the world I did know that, but we were talking about world war two

The poster asked whether Germany will remember that they were shown mercy by the Americans. Germany were not treated with compassion after world war one, which is the war to which you wish to refer.

LooneyTunes

later10 wrote: »

Yes, Looney Tunes, like most of the world I did know that, but we were talking about world war two

The poster asked whether Germany will remember that they were shown mercy by the Americans. Germany were not treated with compassion after world war one, which is the war to which you wish to refer.

The point I was making was the fact that something pre-WWII was still relevent to Germany economically as of September 2010. That's all. If they extended the same 92-year term to us to repay the debt then things would be a lot easier. What are the chances of that happening?

later12

You're suggesting we request the Treaty of Versailles? Really?

LooneyTunes

later10 wrote: »

You're suggesting we request the Treaty of Versailles? Really?

Just longer timeframes to repay debt. It's not a lot to ask now, is it?