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Much Of Southern Europe Is Insolvent

September 28th, 2020 · Comments Off on Much Of Southern Europe Is Insolvent

Don’t take the recent euro strength at face value, it’s simply the result of US rates finally plunging to zero. Behind the euro facade is the fact that much of Southern Europe is basically insolvent with the ECB underpinning their public finances as buyer of last resort. Funny enough, this ECB buying will become much […]

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Tags: Eurocrisis

Surprising Euro Strength

June 7th, 2020 · Comments Off on Surprising Euro Strength

Italian public finances are rapidly becoming unsustainable without the ECB buying large quantities of its debt, the Merkel/Macron plan is no alternative. Without ECB buying large quantities of Italian debt, the eurozone would implode, which is the last thing the world economy needs right now. But the ECB is hamstrung by internal divisions and a […]

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Tags: Eurocrisis

Moment Of Truth For The Eurozone Is Approaching

April 14th, 2020 · Comments Off on Moment Of Truth For The Eurozone Is Approaching

With economies everywhere in a self-induced coma and rescue bazookas getting ever bigger, the effect on public finances is going to be epic. This is going to be difficult anywhere and require debt monetization on a large scale, with uncertain consequences. But some of the worst-hit countries like Italy, as members of a currency union, […]

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Tags: Eurocrisis

Italy Is Too Big To Fail

April 6th, 2020 · Comments Off on Italy Is Too Big To Fail

The ECB shocked the markets last week by arguing it wasn’t in the business of “reducing spreads,” sending shockwaves through the eurozone. Events on the ground have moved so fast that they did an 180-degree U-turn this week, taking out the proverbial bazooka. However, economies are so rapidly deteriorating that we can’t take anything for […]

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Tags: Eurocrisis

The Market Is Not Done Selling

November 7th, 2018 · Comments Off on The Market Is Not Done Selling

The situation on the ground in Italy is deteriorating fast, with growth coming to a complete halt. The debt/GDP ratio will rise further as a result of the expansionary budget. The reason is not only growth deceleration in the eurozone. It’s the rising Italian yield triggering a credit squeeze and capital flight and the end […]

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Tags: Eurocrisis · The Markets

Italy Versus The Markets, A Very Predictable Outcome

October 30th, 2018 · Comments Off on Italy Versus The Markets, A Very Predictable Outcome

The Italian populist government is defying the markets at exactly the wrong moment, with growth and ECB bond buying waning. Its proposed budget will increase the already sky-high debt/GDP ratio further, and this can easily set off a confidence crisis, given a number of vicious cycles that are looming. Italy can’t win a showdown with […]

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Tags: Eurocrisis

Fasten Your Seatbelts For Italy’s New Budget

August 29th, 2018 · Comments Off on Fasten Your Seatbelts For Italy’s New Budget

Italy is likely to come back into focus for financial markets next month, when they will present their new budget. There are numerous plans circulating like a flat tax and a EUR 80B infrastructure blitz; the one thing they have in common is busting public finances. This could set off Italy against the bond markets […]

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Tags: Eurocrisis

Meet The Perpetual Bailout Mechanism That Keeps The Euro Afloat

June 16th, 2018 · Comments Off on Meet The Perpetual Bailout Mechanism That Keeps The Euro Afloat

The creation of the euro has been flawed from the beginning; it’s most definitely not an optimum currency area. It has a tendency to expand differences, rather than diminish them through one-size-fits-nobody monetary policy and potential vicious cycles. However, there is one curious mechanism that sweeps much of these problems under the proverbial carpet and […]

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Tags: Eurocrisis · Target 2

A Misplaced Rally

June 16th, 2018 · Comments Off on A Misplaced Rally

Markets reacted euphorically after the US job numbers and the installation of a new Italian government. We think they are misplaced on both counts, more especially on the Italian government. It’s really difficult to see anything positive coming from Italy embarking on reflating its way out of its debt trap. Source: A Misplaced Rally | […]

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Tags: Eurocrisis · Italy

Italy’s Coming Stealth Eviction From The Eurozone

May 30th, 2018 · Comments Off on Italy’s Coming Stealth Eviction From The Eurozone

The fiscal plans of the incoming Italian government will trigger a bond crash, capital flight, a bank run and a clash with the EU. They are simply not compatible with staying in the euro. Since an Italian debt crisis is already a matter of time anyway, minds have to concentrate on orderly ways out of […]

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Tags: Eurocrisis · Italy