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Could Italy collapse the euro?

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    #302
    Kermit.de.frog
    Registered Users Posts: 23,499 ✭✭✭✭Kermit.de.frog


    Contagion from Turkey and worries Italy will smash it's deficit in the upcoming budget is driving the country's cost of borrowing to new highs again...



    8c3jj

    https://twitter.com/Telegraph/status/1029845051453698048


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    #303
    Kermit.de.frog
    Registered Users Posts: 23,499 ✭✭✭✭Kermit.de.frog


    Italian borrowing costs soaring again after govt said will break it's deficit limit.

    EU and investors not impressed.


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    #304
    johnp001
    Registered Users Posts: 658 ✭✭✭johnp001


    Italian bond yields up again this morning on "own currency" speculation from politicians. 10yr Italian bond yields at highest levels since 2014.


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    #305
    Wanderer78
    Registered Users Posts: 28,841 ✭✭✭✭Wanderer78


    johnp001 wrote: »
    Italian bond yields up again this morning on "own currency" speculation from politicians. 10yr Italian bond yields at highest levels since 2014.

    is this an indicator that theyre moving towards leaving the euro?


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    #306
    FreudianSlippers
    Registered Users Posts: 20,397 ✭✭✭✭FreudianSlippers


    It's more likely posturing more than anything else.


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    #307
    johnp001
    Registered Users Posts: 658 ✭✭✭johnp001


    Wanderer78 wrote: »
    is this an indicator that theyre moving towards leaving the euro?

    Seems to be different reports out there at the moment but this is an article from ANSA published this afternoon with Borghi's statements
    Italy needs own currency - Borghi


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    #308
    Wanderer78
    Registered Users Posts: 28,841 ✭✭✭✭Wanderer78


    johnp001 wrote:
    Seems to be different reports out there at the moment but this is an article from ANSA published this afternoon with Borghi's statements


    I am aware that the Italian banks don't look so stable, it ll be interesting to see how this works out


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    #309
    McGiver
    Registered Users Posts: 4,424 ✭✭✭McGiver


    johnp001 wrote:
    Seems to be different reports out there at the moment but this is an article from ANSA published this afternoon with Borghi's statements
    What a populist bullcrap. This is Greek method. Get their own currency to score even higher deficits and indebt Italy even more. Who will lend them to money then? They need to fix their corruption, inefficiencies, economic policy, education etc. Nothing else will help them.


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    #310
    Kermit.de.frog
    Registered Users Posts: 23,499 ✭✭✭✭Kermit.de.frog


    8ssae

    Given Italy's debt burden bailout territory is anything above 4.5% 10 year yield (above) according to most economists. At around 4.5% they will be locked out of the market. The yields (or interest rate) will soar past that once the market knows Italy can not meet it's sovereign obligations.

    But we can't afford to bail them out. The Euro will be finished along with Italy because the contagion goes to Spain and Portugal and then to the core of the Eurozone.

    This is the price of populist stupidity.


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    #311
    Zubeneschamali
    Registered Users Posts: 16,686 ✭✭✭✭Zubeneschamali


    Kermit.de.frog wrote: »
    The Euro will be finished


    What, again?


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    #312
    Kermit.de.frog
    Registered Users Posts: 23,499 ✭✭✭✭Kermit.de.frog


    Zubeneschamali wrote: »
    What, again?

    I think so unless Italy pulls itself out of it's quagmire of low or no growth it seems inevitable the next crisis will revolve around the country.

    But then did they really qualify in the first place for Euro membership?


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    #313
    Zubeneschamali
    Registered Users Posts: 16,686 ✭✭✭✭Zubeneschamali


    Kermit.de.frog wrote: »
    I think so

    You miss my point. People have been predicting the end of the euro since the euro was created - every crisis, every bump in the road is going to be the last one.

    And yet the euro is trading away happily against the dollar, 10 years after the events of 2008 which were absolutely certain to destroy it.


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    #314
    Kermit.de.frog
    Registered Users Posts: 23,499 ✭✭✭✭Kermit.de.frog


    The Euro can only exist on the premise no country is going to leave it.

    Italy is too big to fail for Europe. We can't bail them out.

    The reason Italian borrowing costs are surging is due to the eurosceptic nature of the government and policy actions they are undertaking which are damaging to Italy's ability to meet it's financial commitments.

    Once the market senses blood it can become a runaway train - then you have contagion - who is next? And then their borrowing costs rise until they are either forced in to a bailout or forced out (Portugal and Spain are the first ports of call for Italian contagion).

    We have not seen single day rises in a country's borrowing costs like this since the height of the crisis.

    https://www.investing.com/rates-bonds/italy-10-year-bond-yield

    Maybe the Italians will just accept prudence over a meltdown...but this situation is unstable and can't continue with countries breaking the rules, doing what they like because it is a threat to everyone else.


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    #315
    EdgeCase
    Closed Accounts Posts: 2,471 ✭✭✭EdgeCase


    Well, I suppose if push came to shove and it were a choice between keeping Italy in or having the Euro fly apart, it would probably be prudent to just manage Italy out of the Euro and come up with a mechanism to protect the members of the bloc that do wish to continue with a single currency.


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    #316
    Kermit.de.frog
    Registered Users Posts: 23,499 ✭✭✭✭Kermit.de.frog


    EdgeCase wrote: »
    Well, I suppose if push came to shove and it were a choice between keeping Italy in or having the Euro fly apart, it would probably be prudent to just manage Italy out of the Euro and come up with a mechanism to protect the members of the bloc that do wish to continue with a single currency.

    Yes but extremely difficult to contain the fallout from any member leaving.

    Not saying it is not possible but it would mean a lot of pain especially for weaker members.


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    #317
    johnp001
    Registered Users Posts: 658 ✭✭✭johnp001


    Italian 10 yr bond yields reaching above 3.6% this morning.

    EdgeCase wrote: »
    Well, I suppose if push came to shove and it were a choice between keeping Italy in or having the Euro fly apart, it would probably be prudent to just manage Italy out of the Euro and come up with a mechanism to protect the members of the bloc that do wish to continue with a single currency.
    If it was possible to manage a eurozone member out of the euro it was even more prudent in the case of Greece.
    It isn't even clear if it is going to be possible for a member of the customs union to leave without major disruption. Leaving the currency union is not feasible, if it was some way would have been found to extricate Greece in the last 8 years.


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    #318
    Zubeneschamali
    Registered Users Posts: 16,686 ✭✭✭✭Zubeneschamali


    Kermit.de.frog wrote: »
    We have not seen single day rises in a country's borrowing costs like this since the height of the crisis.

    Yes, and hence Italy should learn the lesson from Greece and stop with the populist anti-EU anti-euro talk.

    Because the Euro will survive, but that talk may cost Italy an awful lot of money.


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    #319
    Kermit.de.frog
    Registered Users Posts: 23,499 ✭✭✭✭Kermit.de.frog


    Zubeneschamali wrote: »
    Yes, and hence Italy should learn the lesson from Greece and stop with the populist anti-EU anti-euro talk.

    Because the Euro will survive, but that talk may cost Italy an awful lot of money.

    It can't continue the way it is. It's too unstable.

    Europe needs to move toward a federal government with full centralised control of taxes and income.

    It needs massive reform.


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    #320
    EdgeCase
    Closed Accounts Posts: 2,471 ✭✭✭EdgeCase


    That’s highly unlikely though due to a lack of mandate for such a move. Even getting a European Constitution through proved impossible.


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    #321
    Kermit.de.frog
    Registered Users Posts: 23,499 ✭✭✭✭Kermit.de.frog


    If it doesn't happen the market will continue to attack the wreckless and weak countries until they are forced in to bailouts - bailouts we can't afford.

    Ironically if this behaviour continues it will be the Germans that will end up walking away rather than face the prospect of subsidising all of southern Europe!

    The eurozone needs serious reform. It would be difficult politically but I don't see a choice.


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    #322
    EdgeCase
    Closed Accounts Posts: 2,471 ✭✭✭EdgeCase


    Politically it won't happen though and some alternative system that doesn't require a full federal government will simply have to suffice.

    You can't really create a federal system of government like the US when you don't have a federal system of politics.

    The EU doesn't necessarily have to have all the structures of a federal system but it does need closer cooperation within the Eurozone. However, with politics like what's emerged in Italy, that's also looking unlikely.

    I think we'll just see the eurozone stumble on regardless.


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    #323
    Kermit.de.frog
    Registered Users Posts: 23,499 ✭✭✭✭Kermit.de.frog


    We'll see how this Italian crisis unfolds.

    This thing won't hold together like this in my opinion. You can't have countries going off doing there own thing and putting the stability of the currency at risk.


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    #324
    Kermit.de.frog
    Registered Users Posts: 23,499 ✭✭✭✭Kermit.de.frog


    https://twitter.com/TheScepticIsle/status/1049595300141256704


    Italian 10 year yield went over 3.7% this afternoon after the country's Finance Minister spoke with the same sort of delusion Irish politicians had in 2010.


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    #325
    Franz Von Peppercorn
    Closed Accounts Posts: 7,070 ✭✭✭Franz Von Peppercorn


    Zubeneschamali wrote: »
    You miss my point. People have been predicting the end of the euro since the euro was created - every crisis, every bump in the road is going to be the last one.

    And yet the euro is trading away happily against the dollar, 10 years after the events of 2008 which were absolutely certain to destroy it.

    It’s been a total disaster. Lurching from crisis to crisis. Inevitably will fail.


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    #326
    Zubeneschamali
    Registered Users Posts: 16,686 ✭✭✭✭Zubeneschamali


    Franz Von Peppercorn wrote: »
    It’s been a total disaster. Lurching from crisis to crisis. Inevitably will fail.

    Eventually the Sun will swallow the Earth and the Euro will fail.

    "We were right all along!"


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    #327
    Franz Von Peppercorn
    Closed Accounts Posts: 7,070 ✭✭✭Franz Von Peppercorn


    Zubeneschamali wrote: »
    Eventually the Sun will swallow the Earth and the Euro will fail.

    "We were right all along!"

    That’s a strawman argument. I’m not saying it will fail when the sun fails but pretty soon, winthin a decade or a generation. Faster than the Latin monetary union failed. And economic historians will look back on the euro as a disaster.

    (Actually it might continue as a weakened currency of some northern countries but it’s not going to last in its present form).


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    #328
    Zubeneschamali
    Registered Users Posts: 16,686 ✭✭✭✭Zubeneschamali


    Franz Von Peppercorn wrote: »
    I’m not saying it will fail when the sun fails but pretty soon, within a decade or a generation.

    Ooh, within 10 or 30 years - we are right at the cliff edge here.


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    #329
    Franz Von Peppercorn
    Closed Accounts Posts: 7,070 ✭✭✭Franz Von Peppercorn


    Zubeneschamali wrote: »
    Ooh, within 10 or 30 years - we are right at the cliff edge here.

    Do you think the euro will be seen as a success of it lasts 20-30 years? How long has the dollar lasted. Or sterling.


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    #330
    Zubeneschamali
    Registered Users Posts: 16,686 ✭✭✭✭Zubeneschamali


    Franz Von Peppercorn wrote: »
    Do you think the euro will be seen as a success of it lasts 20-30 years?

    I think its a success right now, and will be in 50 years, too.

    Does it put stress on European institutions and on spendthrift governments?

    Yes, and this is a good thing.


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    #331
    Franz Von Peppercorn
    Closed Accounts Posts: 7,070 ✭✭✭Franz Von Peppercorn


    Zubeneschamali wrote: »
    I think its a success right now, and will be in 50 years, too.

    Does it put stress on European institutions and on spendthrift governments?

    Yes, and this is a good thing.

    So the destruction of governments, the stress on institutions and the harming of economies is a good thing?


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