Have come across this video on Europe and the Euro problems quite a few times during the last few days: ‘Clarke and Dawe ask the million dollar question’. For those of you who haven’t seen it yet, enjoy. The video speaks for itself. No further comment needed.
Whilst we wait for the outcome of the current round of Cypriot negotiations, let’s have a jolly song to cheer things up. With no apologies whatsoever to Andy Stewart, TMM give you their version of the Scottish classic “Donald Where’s your Troosers”
“Draghi Where’s Your Euros”
I’m back for a while from the Cyprus Isle
Where if you want your cash you’ll need some guile
And all the locals shout with bile,
“Draghi, Where’s your Euros?”
Let the debt blow high and the growth blow low
We’ll levy a tax on your depo
Russia won’t pay so the the Cyp’s all go,
“Draghi, Where’s your Euros?”
I sat in on a conference call
There was slippery talk between them all
And I was afeared that Europe would fall
‘Cause they wouldn’t give them Euros (more…)
Sovereign debt worries in Europe have been elevated for a couple of months now, and today Hungary moved into the crosshairs. Sovereign debt default risk as measured by 5-year CDS prices has spiked for Hungary and the countries surrounding it today, but default risk for this region still remains well below levels seen in late 2008 and early 2009. The first two charts below of 5-year CDS for Austria and Hungary since 2008 highlights this. Greece and Portugal default risk remains elevated as well, but at the moment it is still down from its recent peaks. France also remains elevated, but it is still below highs seen in early 2009. The same can’t be said for Spain, however. Spain default risk reached a new crisis high today, taking out levels seen prior to the trillion Euro bailout. And Spain matters much more than Hungary.
The ECB has talked more hawkish than the Federal Reserve but basically they are all money printers. Some are better at it, and faster and have more efficient machines the others are slower but basically central banks, they run a print and print.
And it would be a mistake to think that the bailout is actually a bailout of Greece. Greece is a write-off. You can`t have the kind of debt Greece has with Olive Oil income. They have no industries to speak of. They have shipping but the shipping industy does not pay taxes in Greece.
So basically the bailout is actually a bailout of the ECB itself because they already have a lot of paper of Spain, portugal and Greece in their portfolio and a bailout of the banks in Europe. They lent money to Greece, Spain and Portugal, so they are all in the same boat.
For global stocks, the way down ($15 trillion lost in 7 months) has been much easier than the climb up ($30 trillion added in 4 years).
With markets from Asia to Europe entering bear markets this month, stocks worldwide have lost more than $14 trillion, or 20 percent, in value from a record last June amid worries over global growth and deepening oil declines. The pace of the drop has been so fast that it has already unraveled about half of the rally since a low in 2011.
