Italy Bond Yields Pass Seven Percent

[Conley]

ROME — Italy’s financial crisis deepened on Wednesday despite a pledge by Prime Minister Silvio Berlusconi to resign once Parliament passes austerity measures demanded by the European Union.

The move failed to convince investors, propelling Italy’s borrowing costs through a key financial and psychological barrier of 7 percent, close to levels that have required other euro zone countries to seek bailouts.

Mr. Berlusconi, cornered by world markets and humiliated by a parliamentary setback, appeared to have become the most prominent victim of the broader European debt crisis. But his decision did not remove wide uncertainty about Italy’s ability to tackle the crisis, and some analysts said the prospect of a protracted period of political wrangling could exert further pressure for a quicker exit from the impasse.

http://www.nytimes.com/2011/11/10/world/europe/european-debt-crisis-as-berlusconis-last-stand.html?_r=1&hp

It didn't take long for rates to blast through seven percent. It went from 6.7 to 7.4 in a day. Ugh.

In Europe’s months of crisis, yields in excess of 7 percent have triggered calls for bailouts and the subsequent demise of governments in Ireland, Greece and Portugal, but Italy’s debt is much higher than in those countries. The 7 percent barrier is seen partly as a symbolic threshold, but it also reflects hard financial facts: borrowing costs at that level make it difficult for Italy to raise new funds to pay off what it owes. The figure is widely seen by bond market analysts as unsustainable.

[MMC]

They really do not know what is going on over there. I listen every morning to those European Economists and what they have to say. In the meantime they keep saying how they are in a recession. Sorry I am not going for the change in terminology. It's a fricken depression. The best part is when they start talking about the US and how all should be investing in the dollar as it is still safe to do so. What we should do and why. Then what will be affected by our politicans. I like how they try to tie that in always. Course then like this summer they were all talking about how the US would rebound in jobs and job creation all in the final quarters. Then that didnt take place. Then they fell back n what geithner had stated. Which was then him telling all that if Republicans get their way this will cost this country more.

Then they talk with that chick that is running the IMF.....switiching back and forth from terminology with political capital and economic capitol. All the while looking to get those bailouts out there. Now remind us how the French are playing things and putting the pressure on for the austerity packages. Seems to me that the proof of spending is at hand and they are just kicking the can down the road. She then ties in Geithener and what Bernanke and what we are doing. Which has nothing to do with what they had asked about the EU. Or Frances banks taking these massive losses. My question is just how are the French helping anything out with this situation in the EU especially when they are heading up to bat after Spain.

[Peter1469]

What the Euro elites know, but won't openly admit is that their problem is too much debt. That debt will be deleveraged one way or the other.

They don't have the political will to correctly manage the deleveraging (they are failing) and that leaves door #2- a currency collapse.

[MMC]

What the Euro elites know, but won't openly admit is that their problem is too much debt. That debt will be deleveraged one way or the other.

They don't have the political will to correctly manage the deleveraging (they are failing) and that leaves door #2- a currency collapse.


Which comes with the spending. Yet for the last 30 years they haven't had to include costs for defense per se. Althought Lasarde was talking about the ETF could print more money. I was like how is the printing of more money going to solve the debt crisis. 30 years of spending and not paying for anything. Try paying off ones debt's instead of borrowing more.

[Peter1469]

exactly

[Conley]

How sweet would it be to get a AAA bond with 7 percent though. I guess oil and gold are the only places to put money these days, especially with Israel-Iran on the horizon.

[MMC]

http://news.yahoo.com/eu-warns-possible-recession-eurozone-093842226.html

The sharp cut in the forecast comes as the eurozone's debt crisis has spread alarmingly to Italy, the single currency bloc's third-largest economy. The interest rate on Italy's 10-year bonds has reached the same 7 percent level that eventually forced Greece, Portugal and Ireland to request multibillion euro bailouts.

Italy is unlikely to fulfill its promise of balancing its budget by 2013 if recently promised austerity and reform measures aren't implemented. According to the forecast, which does not take into account the most recent promises, Italy will still run a deficit of 1.2 percent, with debt close to 119 percent of economic output. And growth is set to slow to 0.1 percent next year, down from 1.3 percent forecast this spring.

Berlusconi has come under so much pressure that he promised to resign as soon as the new budget has been passed. The Commission this weeks started a verification mission in Rome to check on Italy's efforts. The International Monetary Fund is due to follow soon.
Speculation Premier Silvio Berlusconi will be replaced by leading economist and former Commissioner Mario Monti once he officially resigns has helped calm the market mood somewhat Thursday, but interest rates remain much higher than just a week ago.

Italy's most important task in Italy was to restore political credibility and effective decision making. Because of the relatively long average maturities of Italy's debt, the country could sustain the recent jump in borrowing costs for a short time.....snip~

Really.....their most important task was to restore political credibility and effective decision making. NO! Their most important task is to quit spending money they do no have. Get rid of those Credit Cards. Quit doling out 500-2000 Women for Arab Sultans and and Sunni Overlords. Quit throwing lavish parties for Dictators and or Warlords. Most importantly. Knock off that bullshit in keeping up with the Jones. Play their cards right and they could become the Number Two European Economy. Then they can dictate more and do more. Including telling the French and their IMF with ETF.....to STFU! >:(

[Peter1469]

How sweet would it be to get a AAA bond with 7 percent though. I guess oil and gold are the only places to put money these days, especially with Israel-Iran on the horizon.


1. I wouldn't trust the ratings.

2. I am worried about jumping to gold and silver: typically it is too late to make the jump once there is as much hype as what we see now.

But then, we are not in typical times.

[MMC]

How sweet would it be to get a AAA bond with 7 percent though. I guess oil and gold are the only places to put money these days, especially with Israel-Iran on the horizon.


1. I wouldn't trust the ratings.

2. I am worried about jumping to gold and silver: typically it is too late to make the jump once there is as much hype as what we see now.

But then, we are not in typical times.


Its always worth getting into Gold and precious metals. Note: Our Government is trying to buy up everybodies gold. I always tell people they at least should have a few ounces of Gold. Plus don't get rid of all that loose gold. When ready take all of that and get it melted down into a Coin and or Gold Dust and grains. Gold is only going to continue to go up. Even moreso with what is going to take place with the EU.

[Peter1469]

Gold does always go up.

http://goldprice.org/30-year-gold-price-history.html If you bought in 1980 you would have been disappointed in 1983. And you would have had to wait until 2004 to break even.

Typically by the time everyone is jumping onto a bandwagon it is too late. Sure if the Euro and the dollar collapse gold will maintain its value. But what if the EUro collapses and people jump to the USD as the best of the weak currencies? They certainly won't jump to the Yuan, talk about cooked books.

[MMC]

Gold does always go up.

http://goldprice.org/30-year-gold-price-history.html If you bought in 1980 you would have been disappointed in 1983. And you would have had to wait until 2004 to break even.

Typically by the time everyone is jumping onto a bandwagon it is too late. Sure if the Euro and the dollar collapse gold will maintain its value. But what if the EUro collapses and people jump to the USD as the best of the weak currencies? They certainly won't jump to the Yuan, talk about cooked books.


Yep it somehow always manages to come back. What do you think about going back to the gold standard Peter? :-\

[Conley]

How sweet would it be to get a AAA bond with 7 percent though. I guess oil and gold are the only places to put money these days, especially with Israel-Iran on the horizon.


1. I wouldn't trust the ratings.

2. I am worried about jumping to gold and silver: typically it is too late to make the jump once there is as much hype as what we see now.

But then, we are not in typical times.


I wouldn't go entirely by the ratings, I just mean that everyone knows Italian bonds are crappy. If I had to pick between AAA and B+, I wouldn't be choosing the B+

Everyone always says don't jump into the bubble. They've been saying that about gold for a couple of years. So to me, that's not a reason although I grant you most of the money has probably already been made.

[Conley]

BTW Peter, if you have some ideas let's hear them ;D

I figure the dollar is only going to get weaker and there's not really anywhere to invest these days. I do think oil is going up, it's low right now and anything in the Gulf will set it off. It might not spike until next summer.

[Peter1469]

Gold does always go up.

http://goldprice.org/30-year-gold-price-history.html If you bought in 1980 you would have been disappointed in 1983. And you would have had to wait until 2004 to break even.

Typically by the time everyone is jumping onto a bandwagon it is too late. Sure if the Euro and the dollar collapse gold will maintain its value. But what if the EUro collapses and people jump to the USD as the best of the weak currencies? They certainly won't jump to the Yuan, talk about cooked books.


Yep it somehow always manages to come back. What do you think about going back to the gold standard Peter? :-\


I would not go back to a gold standard, but a standard back by lots of currencies.

And yes, if gold will eventually go up. The question is whether you are retiring during the time that gold has crashed to a really low low.

[Peter1469]

BTW Peter, if you have some ideas let's hear them ;D

I figure the dollar is only going to get weaker and there's not really anywhere to invest these days. I do think oil is going up, it's low right now and anything in the Gulf will set it off. It might not spike until next summer.


If the Euro collapses, which I think that it will, I think the dollars will get stronger since there really is not another alternative out there.

[Conley]

BTW Peter, if you have some ideas let's hear them ;D

I figure the dollar is only going to get weaker and there's not really anywhere to invest these days. I do think oil is going up, it's low right now and anything in the Gulf will set it off. It might not spike until next summer.


If the Euro collapses, which I think that it will, I think the dollars will get stronger since there really is not another alternative out there.


The dollar might get stronger short term I think, but the collapse of the euro will mean such financial fall out I'm not sure it matters. The Yuan is challenging the dollar now too, but I don't pretend to understand how the currency markets work. The Chinese will repeat their demand for a global currency.

New Move to Make Yuan a Global Currency

http://online.wsj.com/article/SB10001424052748703791904576076082178393532.html

[Peter1469]

Gold does always go up.

http://goldprice.org/30-year-gold-price-history.html If you bought in 1980 you would have been disappointed in 1983. And you would have had to wait until 2004 to break even.

Typically by the time everyone is jumping onto a bandwagon it is too late. Sure if the Euro and the dollar collapse gold will maintain its value. But what if the EUro collapses and people jump to the USD as the best of the weak currencies? They certainly won't jump to the Yuan, talk about cooked books.


Yep it somehow always manages to come back. What do you think about going back to the gold standard Peter? :-\


I would not go back to a gold standard, but a standard back by lots of currencies.

And yes, if gold will eventually go up. The question is whether you are retiring during the time that gold has crashed to a really low low.


I meant backed by a lot of commodities not currencies.

[MMC]

BTW Peter, if you have some ideas let's hear them ;D

I figure the dollar is only going to get weaker and there's not really anywhere to invest these days. I do think oil is going up, it's low right now and anything in the Gulf will set it off. It might not spike until next summer.


If the Euro collapses, which I think that it will, I think the dollars will get stronger since there really is not another alternative out there.


The dollar might get stronger short term I think, but the collapse of the euro will mean such financial fall out I'm not sure it matters. The Yuan is challenging the dollar now too, but I don't pretend to understand how the currency markets work. The Chinese will repeat their demand for a global currency.

New Move to Make Yuan a Global Currency

http://online.wsj.com/article/SB10001424052748703791904576076082178393532.html


Yep.....there are quite a few that would like to see the US doolar removed as the World's Reserve Currency. Already China and Russia are conducting trade without switching to US Dollars.

Also Our so called pals the Sunni would like to See the US dollar removed as the Worlds Currency.

Both have been working to try and get this done.

[MMC]

http://news.yahoo.com/italy-easily-raises-3-billion-bond-auction-103423750.html

ROME (AP) — Italy easily raised €3 billion ($4.1 billion) from markets, though at a higher cost, as premier-designate Mario Monti began talks on forming a new government of experts to guide the country through financial crisis.

While the treasury raised the maximum amount sought in a sale of five-year bonds, market sentiment remained cautious. Investors demanded an interest rate of 6.29 percent on Monday, the highest level since 1997, compared with 5.32 percent at a similar auction a month ago.

Napolitano emphasized that €200 billion ($273 billion) in Italian debt comes due through the end of April — requiring decisive action.....snip~


Another difference with the Europeans is that their governments have stock bought into with private companies. Especially Italy. One would think they would have to sell off those shares. Or what Amounts to bailouts. In order to raise Capital.

[Conley]

6.29 percent on Monday, the highest level since 1997, compared with 5.32 percent at a similar auction a month ago.

This is completely unsustainable. Just financing debt with more debt, how is this going to have a good ending for Italy, Europe, and the rest of the world?

[Peter1469]

Right. That is what people refuse to understand.

They are only creating a currency collapse.