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Greece poll

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It stopped being about Greece about 12 months ago the attention of the bond vigilantes has transfered to Italy this is a problem of the "too big to bail" category. The banks will not be allowed to fail under the current plan and enough liquidity will be provided to roll over Spanish and Italian debt for the next 12 to 18 months. The hope is this will provide enough time for realistic plans to be put in place for the too big to bail countries to reduce demands on the credit mkts or alternatively credit markets to stop requiring out sized risk premiums for Italian debt. The fact that the spreads on Italian bonds has never come in HAS to be of concern. For the few banks that are able to tap the mkts their pfds and debt are prolly VERY attractive currently for the banks that can not it is likely that creditors are going to be required to provide equity capital so they are definately at some risk. I think one can assume the divy is gone on almost all of the Euro banks for the next few years. Euro banks are delevering and the ECB is helping by buying PIIG debt but how many failed auctions can the ECB underwrite the ECB is also insolvent at this stage. We are in a situation where the the ECB cuts interest rates and bond prices are falling this is not one expects to see in "normal" mkt. Gold is trading like a risk asset on steroids these days. Was the low made in October THE low we will see in the mkts for the rest of the year perhaps but I am not willing to go all in on that bet. Did any one notice that Greece replaced the heads of all their armed services yesterday coincidence maybe but do you want to make a large bet on it.

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Wynne Godley, October, 1992:


"If a country or region has no power to devalue, and if it is not the beneficiary of a system of fiscal equalisation, then there is nothing to stop it suffering a process of cumulative and terminal decline leading, in the end, to emigration as the only alternative to poverty or starvation. I sympathise with the position of those (like Margaret Thatcher) who, faced with the loss of sovereignty, wish to get off the EMU train altogether. I also sympathise with those who seek integration under the jurisdiction of some kind of federal constitution with a federal budget very much larger than that of the Community budget. What I find totally baffling is the position of those who are aiming for economic and monetary union without the creation of new political institutions (apart from a new central bank), and who raise their hands in horror at the words ‘federal’ or ‘federalism’. This is the position currently adopted by the Government and by most of those who take part in the public discussion."


Read more: http://www.newyorker.com/online/blogs/johncassidy/2011/11/wynne-godley-eurosceptics.html#ixzz1cfHYW4S5


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