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Chart of the Day: European debt crisis – where is it heading?

What is the expected end game for Europe?


by Chris Marshall on Jul 15, 2011 at 09:12

As if investors weren’t jittery enough in the face of rising European peripheral nation bond yields and Moody’s decision to consign Ireland to junk status, tonight’s European bank stress results are further rattling nerves.

But where is this all heading? To no quick end was the answer from the majority of professional investors at a conference held by RBS on Tuesday.

Most of those voting were emerging market investors, who have become increasingly spooked by eurozone troubles; so much so that in a separate question 36.8% of them – the majority – said that periphery eurozone problems posed the greatest risk to emerging markets over the next 12 months, followed by a slowdown in the G3 (US, EU and China).

11 comments so far. Why not have your say?

John Lacy

Jul 15, 2011 at 12:40

Is Ireland now so insignificant that they don't get a mention in the default scenario??

This just sort of emphasises the ill-thought out crap that's being bandied about to just about every one's detriment.

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Jul 15, 2011 at 13:13

Europe is a big burocrasy, power without responsability and very well paid politicians. Can not suceed in this way, the system is too artificial.

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Cape Town

Jul 15, 2011 at 14:15

To my mind, this crisis was foretold from the beginning. The basic gameplan has always been to get political integration as a spillover from economic. the only way out of this crisis is for central european govenment to take full fiscal control, bail out the weaker member states as, say, UK government bails out weaker members of the kingdom.

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Jul 15, 2011 at 15:01

Since when has 36.8% been a majority? It may be the highest, but it ain't no majority.

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John Lacy

Jul 15, 2011 at 15:27

No thanks Cape Town---The europeans can shove political integration "where the sun don't shine".

One size doesn't fit all and it's about time that our meglomaniac european beaurocrats were broght to heel. We need less government interference not a further escalation.

GAG please note the phrase used was "the highest proportion" not majority. The danger of any vote is of course the no-shows. We in Wales got saddled with a bunch of expensive numpties with a referendum vote of 50.3% of a turnout of 24% of eligible voters. So according to that result 12.1% of the eligible voters constitutes a majority

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Cape Town

Jul 15, 2011 at 16:43

John Lacey - absolutely, I am not endorsing this solution, but it is the only way out if you want to work within the system. Germany sends 40% of its exports to the South of Europe and profits enormously from its undervalued Euro-deutshcmark. So, they can restore the balance sheets of these countries. Otherwise, they'll see their banks fall over as the South is not able to repay its debts. But German "aid" won't be no-strings-attached - they'll demand reforms and austerity measures ie they'll take political control. And this is just the start of the plan to tax and run their new empire.

If you want out John, and UK has a chance here, join the growing protest movements, take out the existing political order, make banks and bond holders pay their own debts instead of displacing them to the government and onto to the citizens - what, after all, has the almost trillion owed by Ireland got to do with Mrs Murphy? or Mrs Smith indeed?

So John, what do you want and how do you see this crisis continuing and how will it be sorted in the end?

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John Lacy

Jul 15, 2011 at 17:39

That's very cruel Cape Town---We're all very good at saying what we don't want but being constructive is much more difficult but here goes anyway!!

I think it splits into 3 categories---what do I want, what will work and finally what do I think is going to happen.

1) What do I want---The UK to withdraw from full EU membership to the EEA which will still give us the trading rights but distances us from fiscal contributions. I also want this oppotunity to include re-gaining control of our own borders and immigration policy and the re-assertion of the power of Parliament as the controlling power. Brussels and the European Court can take a long walk off a short pier.

I think it would also be a good point to re-assert the need for personal resposibilty for our lives and actions. A good dose of personal responsibility is required to counteract the current situation where everyone has rights but nobody wants take on the responsibilities that the claiming of those rights engender. We all have a right to help from the state in times of personal hardship but those benefits should be earned by compulsory work in the community whilst claiming.

ALL new housebuilding and job creation to take place away from London and the South East---wealth and population need to be redistributed.

What will work---All of the above with the right political will and the balls to tell interfering outsiders where to go.

What do I think will happen---Greece, Portugal and Ireland will ultimately default. The eurozone will retreat to a membership of Germany, France, The Netherlands and Belgium which will probably work. The others to revert to their own currency and all of their debts to be transferred to them on a one for one basis (ie one drachma for one euro) These currencies will rapidly devalue forcing bondholders to take a hit but not more than they can afford---it shouldn't be more than 50%. Whilst this will hamper the remaining countries it will not bankrupt them and will allow the weaker nations to continue trading on more advantageous terms. The centralised bureacracy in Brussels will be scaled back as it will only be scrounging from Germany, France, The Netherlands and Brussells and economic and political union will be consigned to the dustbin of history.

The alternative is a continuation of the current madness and bankruptcy and political instability for all.

Now my brain hurts and I'm going for a beer or two!!!

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Cape Town

Jul 15, 2011 at 18:35

You know what John, this crisis has taught us all so much about the ins and outs of the economy, politicans are no longer remote frmo us, we can see how a good dose of solidarity would help us pull through, and everyone is longing for the time when the environment will win over the interests of individual companies. And your answer is about spot on, it is what most people want. So why can't these donkeys of politicians seize the situation and put it to rights, before we seize them by the goulies and put them in the street behind us.

Which pub?

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John Lacy

Jul 16, 2011 at 09:59

Hi Cape Town--The answer to your first question I'm afraid is that the politicians want to be big fish in a big pond---if you decrease the size of the pond it limits their money-making opportunities. I know you were being metaphoric but can I please have at least 2 pairs of rubber gloves before seizing any politician by the goulies (Oh God imagine if it was Mandelson---yeeeeuuuukkk). And the pub will usually be The Exchange in Risca just north of Newport---not flash but good beer and sane prices. You're welcome any Thursday or Sunday evening because that's where my mates and I adjourn after choir practice to lubricate our vocal chords!!

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Cape Town

Jul 16, 2011 at 11:41

I know Newport, on the way to Llanthelli, but alas I'm in the Middle East and not planning a return to "the West" any time fast - perhaps after the debts have been paid off and the currency has stabilised around its new all-time lows! So about two generations from now. Your neighbours will be Chinese and you'll be drinking Tsan Tao down the pub.

But I'll look out for you on future Citywire discussions. It's a lively broadmail, I used to contribute quite a lot more at one time and they even invited me to a luncheon in the City!

Take care John.

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Jul 16, 2011 at 14:01

Well said John Lacy, If only it would come true!

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