Financial fuckery thread

[Jenne]

I had written up a wordy, not very nice reply to that over lunch and deleted it because it was pissing me off and I'm in a pretty damn good mood today and don't want to change that.

But yeah, LMNO.  Sometimes 2 words is more than enough.

I did the same.

[Jenne]

I thought that statement was a perfect example of Osbourne's childishness and lack of political experience.

I expect the ECB said "yes, George dear", patted him on the head, burped him and put him to bed, then went back to their discussions.

And I think that "six weeks" is probably contingent on some policy or other running out or expiring at that point in time?  I thought it was policy-related, that time frame...or maybe I heard the NPR report wrong, I disremember.

[Cain]

I believe six weeks from when he said it is the end of October...when Greece runs out of money, without another tranche of the bailout cash being provided.

[Scribbly]

It was the deadline for when leaders of the G20 group will next meet IIRC. I think it was only said a few days ago... could be mistaken though, there's a lot of stupid pouring out of financial news.

[Jenne]

THAT's what it was.

[Cain]

If that is the reasoning, Osborne's even more of a neophyte than I previously thought.

G20 = utterly useless talking shop, whose only purpose is to make the EU decision-making process look speedy and efficient.

[Scribbly]

Every word out of Osbourne's mouth makes me wish Vince Cable had somehow wrested the job from him.

Possibly in some sort of cage match. Cable might be old, but he's also a survivor, and I think Osbourne would faint at the sight of his own blood.

[deadfong]

Former member of the Bush Economic Team, Phillipa Malmgren, is predicting Germany is going to reintroduce the Deutsche Mark:

http://www.pippamalmgren.com/77.html

News to expect in the coming days and weeks:

    * Greece defaults
    * Germany protects German banks but other countries cannot do the same thus quickly provoking multiple sovereign defaults and or bank failures, all of which may easily lead to a payments crisis in the global banking system. Derivatives are particularly at risk in terms of operation and execution.
    * The Euro falls in value especially against the US dollar
    * The Germans announce they are re-introducing the Deutschmark. They have already ordered the new currency and asked that the printers hurry up.
    * The Euro falls even more on any news that Germany is withdrawing from the Euro.
    *  Legal wrangling begins as to the legality of Germany's decision. Resolution takes years.
    * Germany insists that the Euro continues to exist even they do not use it any longer. They emphasize that European unification will continue and suggest new legal instruments to strengthen European Unification including new EU Treaties.

If true....woah.

Looking through her article, all I could find was this:

His [meaning the German finance minister] reference to "monetary reform" is telling. He did not say "fiscal reform". Fiscal reform would potentially cure the problem. Instead he says "monetary reform" meaning Germany pulls out of the Euro and prints DMarks again.

I'm not savvy enough on economic terminology - is that really how economists would read the difference  between "fiscal" and "monetary?"

Also, I may have missed it, but I couldn't find a reference to Germany having already ordered the new currency anywhere in her article.  Seems like if it's true, that's not the sort of move that would be easy to hide, and if it is the case, why hasn't the shit hit the fan already?

[hirley0]

Sat 10/1 Gold Silver & Copper wiLL be reMonitized (revalued)
as happens prior to most RIF (Reductions in Force) TBC
ALSO Old Oregon FOREST tree WOOD contaminated by Japanese ACTIVITY wiLL be too
= = = ===
S2 Listen? its ReBooT week eXpect NOTHing links to 35$ gold T
M3 YEAH THERE aRe links somewhere & C Me's 2 Not today?

[Triple Zero]

Also, I may have missed it, but I couldn't find a reference to Germany having already ordered the new currency anywhere in her article.  Seems like if it's true, that's not the sort of move that would be easy to hide, and if it is the case, why hasn't the shit hit the fan already?

Yes, I wondered about that as well.

I scanned the article and couldn't find it either, except the statement Cain quotes. All the rest is a lot of very technical financial arguments, so I can't judge a lot about the validity of those, but if Germany has already ordered and urging the printers to hurry up, that's a very clear signal.

Asking my gf (who's German) she said there's only a tiny minority party (less than 1%) in Germany that wants to get rid of the Euro, though I don't know the details of that either. And it could very well be that some major parties would go along as soon as the financial institutions say it's the only way.

[Cain]

It should be pointed out, the person I quoted is a political analyst for a financial consulting firm - their job is to outguess the headlines, and before they become headlines.

She seems to be a fairly credible person, her association with the Bush administration nonwithstanding - therefore while I'm sceptical of such a claim, I cannot completely dismiss it.  I would imagine, if Germany were looking to reintroduce the Mark, it would initially be under circumstances of great secrecy, with only the very politically connected able to find out what is going on.

If that is indeed the case.  There are...vested interests in seeing the Euro destroyed, after all, and such news could be disinformation, calculated to spread dissension in European Union ranks.  Either way, it is worth keeping an eye on...just in case.

[Cain]

Nice to see that economic reform is strengthening the UK economy http://www.guardian.co.uk/society/2011/oct/01/sharp-rise-demand-food-handouts

Britain has seen a sharp increase in the number of people unable to afford to feed themselves at the most basic level, thanks to the worsening economic climate and changes to the benefit system, according to a survey by a leading food charity.

In the past year FareShare, which redistributes waste food from major food manufacturers and supermarkets to social care charities, has seen a 20% rise in the number of people it is feeding – from 29,500 a year to 35,000.

And many of those, blighted by rising unemployment and business failures, are coming from the sorts of stable family backgrounds once considered immune to the worst effects of recession.

Something is going to have to give, eventually.  Sadly, I think it is more likely to be these poor saps than somone more deserving of such a fate.

[Cain]

http://www.bbc.co.uk/news/business-15176947

The Italian government's credit rating has been slashed by Moody's from Aa2 to A2 with a negative outlook.

The ratings agency blamed a "material increase in long-term funding risks for the euro area", due to lost confidence in eurozone government debts.

Despite Rome's low current borrowing needs, and low private-sector debt levels in Italy, Moody's said market sentiment had turned against the euro.

Prime Minister Silvio Berlusconi said the decision was expected.

Analysts say Italy's downgrade is likely to be followed by similar cuts in the credit rating of Italy's banks, which would put severe pressure on their ability to borrow.

"This downgrade will make it even harder for Italy to borrow," says BBC business editor Robert Peston. "However, that is not the worst of it.

"If Italy is looking like a more risky place to lend, its banks... will find it harder and more expensive to borrow. The [eurozone] banking crisis will be exacerbated."

The rationale for Moody's downgrade will also be worrying for other eurozone governments, such as Spain, whose borrowing costs have also risen like Italy's as markets have lost confidence in their creditworthiness.

Moody's also raised warnings about Italy's growth outlook, citing structural economic problems in Italy, as well as the global economic slowdown.

Another problem noted by the rating agency was what it called political and economic "implementation risks".

"The question is, if [eurozone governments] will move fast enough... to really put in place a credible solution," says Robert Peston.

The Italian government has for several years earned more in tax revenues than it spends. However, the government also has a large outstanding debt - equivalent to nearly 120% of GDP.

The government relies heavily on the markets' willingness to relend these debts as they come due, and to lend it the cost of meeting its interest payments.

Moody's said that Italy could be further downgraded to "substantially lower rating levels" if a further deterioration in investor sentiment made it even harder for the country to raise cash from the markets.

Italy's cost of borrowing rose sharply over the summer on market fears that a slowdown in Italian growth could make existing debts unsustainable.

That prompted the European Central Bank to intervene by buying up Italy's debts - a controversial policy in Germany. But despite the ECB's action, Italian borrowing costs have begun to creep up again in recent weeks.

Fuck

[Faust]

Things are going to move faster now. There was going to be a bit of time between Greece's inevitable bailout and Italy going broke but now we're probably going to go straight from one to then next, if If not before... Having to deal with Greece and Italy at the same time would be disastrous.

[Cain]

One of the many problems with the EU is that, while it recognizes it has a serious problem when it comes to crisis decision-making, historically it has only recognized a need for crisis decision-making in terms of military-conflict zones, such as the Bosnian and Kosovo Crisis.  In other words, it has worked to overcome its institutional paralysis, but only when it comes to those issues.  It was never considered that crisis mechanisms might be required for economic decision-making.

Probably because the EU was built during a time when the ratings agencies weren't acting like marauding bandits, destabilizing national economies for fun and profit.

To be honest, I am surprised they are even managing to cope with the Greece crisis.  If an Italian crisis does hit at the same time...as you say, it would be disastrous.