Re: [evol-psych] The horrible truth starts to dawn on Europe's elites
If you watch with attention, you will see that there are more PIGS than many people think... Not just in Club Med or Ireland.
Now, many PIGS (in the financial sense) are gaining wings, and are flying (that is, the yields of their bonds are skyrocketing). It's possible to see the movement now in Italy and Spain, but also in Belgium, Poland, and Hungary. And Belgium belongs to the eurozone too.
Of course, were California, Illinois, and Florida not protected by the US federal government and they would be additional PIGS taking off the ground, at this precise moment.
At 17:20 30-11-2010, you wrote:
>> Echoing the national mood, Sinn Fein leader Gerry Adams said it was "disgraceful" that the Irish people should be reduced to debt servitude to foreign creditors of reckless banks. " <<
> Contagion strikes Italy as Ireland bail-out fails to calm markets
The EU-IMF rescue for Ireland has failed to restore to confidence in the eurozone debt markets, leading instead to a dramatic surge in bond yields across half the currency bloc.
By Ambrose Evans-Pritchard, International Business Editor 8:15PM GMT 29 Nov 2010
Spreads on Italian and Belgian bonds jumped to a post-EMU high as the sell-off moved beyond the battered trio of Ireland, Portugal, and Spain, raising concerns that the crisis could start to turn systemic. It was the worst single day in Mediterranean markets since the launch of monetary union.
The euro fell sharply to a two-month low of 1.3064 against the dollar, while bourses slid across the world. The FTSE 100 fell almost 118 points to 5,550, while the Dow was off 120 points in early trading.
"The crisis is intensifying and worsening," said Nick Matthews, a credit expert at RBS. "Bond purchases by the European Central Bank are the only anti-contagion weapon left. It needs to act much more aggressively."
Investor reaction comes as a bitter blow to eurozone leaders, who expected the 85bn (£72bn) package for Ireland agreed over the weekend to calm "irrational markets".
While the Irish rescue removed the immediate threat of "haircuts" for senior bondholders of Irish banks, it leaves open the risk of burden-sharing from 2013 on all EMU sovereign bonds and bank debt on a "case-by-case" basis. Traders said bond funds have been dumping Club Med bonds frantically to comply with their "value-at-risk" models before closing books for the year.
Yields on 10-year Italian bonds jumped 21 points to 4.61pc, threatening to shift the crisis to a new level. Italy's public debt is over 2 trillion, the world's third-largest after the US and Japan.
"The EU rescue fund cannot handle Spain, let alone Italy," said Charles Dumas, from Lombard Street Research. "We we may be nearing the point where Germany has to decide whether it is willing take on a burden six times the size of East Germany, or let some countries go."
Italy distanced itself from trouble in the rest of southern Europe early in the financial crisis, benefiting from rock-solid banks, low private debt, and the iron fist of finance minister Giulio Tremonti. But the crisis of competitiveness never went away, and the country has faced a political turmoil for weeks.
If Portugal and Spain have to follow Ireland in tapping the EU's 440bn bail-out fund as widely feared after Spanish yields touched 5.4pc this will put extra strains on Italy as one of a reduced core of creditor states. The rescue mechanism has had the unintended effect of spreading contagion to Italy, and perhaps beyond. French lenders have $476bn of exposure to Italian debt, according to the Bank for International Settlements.
In Dublin, Fine Gael, Labour and Sinn Fein have all vowed to vote against the austerity budget in early December, raising doubts over whether the government can deliver on its promises to the EU.
Echoing the national mood, Sinn Fein leader Gerry Adams said it was "disgraceful" that the Irish people should be reduced to debt servitude to foreign creditors of reckless banks. "The costs of this deal to ordinary people will result in hugely damaging cuts," he said.
One poll suggested a majority of Irish voters favour default on Ireland's bank debt. Popular fury raises the "political risk" that a new government elected next year will turn its back on the deal.
Premier Brian Cowen said there was no other option. "We are not an irresponsible country, " he said, adding that Brussels had squashed any idea of haircuts on senior debt. Irish ministers say privately that Ireland is being forced to hold the line to prevent a pan-European bank run.
There is bitterness over the EU-IMF loan rate of 5.8pc, which may be too high to allow Ireland to claw its way out of a debt trap. Interest payments will reach a quarter of total revenues by 2014. Moody's says the average trigger for default in recent history worldwide has been 22pc. "The interest bill is enormous. The whole process lacks feasibility," said Stephen Lewis, from Monument Securities.
Olli Rehn, the European economics commissioner, said Ireland is in better shape than it looks, recording the EU's strongest growth in industrial output in September as the IT and drug industries boost exports.
"Ireland's real economy has not gone away. It is flexible, open, has strong fundamentals, and has the capacity to rebound relatively rapidly. The Irish are smart, resilient, stubborn people, and they will overcome this challenge," he said.
This is perceptive and nuanced:
... in the United States at least, "liberals" have become advocates of the power of government, while "conservatives," although still advocating the traditional police power of government in morals, retain some sense of the limits of government established in theory by the United States Constitution. This historical development is just the opposite of the continued meaning of "liberal," and the continued implication of "convervative," in Europe. Thus, the disarmament of the citizenry, compulsory schooling, etc. are practices intimately associated with thePrussian and then Imperial German governments.Few would think of those regimes as "liberal." For the charts here, I have retained the problematic questions in order to honestly portray the shifting sympathies of "liberal" American politics as in fact a shift towards authoritarianism ... <
There IS quite a disconnect between the flag-waving enthusiasm for empire and desire for governmental enforcement of religious values, and, at the same time, calling for a less expensive and intrusive government. It is logically inconsistent, but that is how most people are, and many of 'us' who prefer freedom DON'T support empire or government enforced morality, as particularly manifest in 'victimless crime'. I have been in an argument on another list, regarding a case of incest between a father and daughter who was old enough to legally 'consent'. I take the view that it is none of the government's business, and, predictably, was accused of 'approving' of the relationship. I tried to explain that I simply felt there had to be limits on what the government could criminalize. In this case it looks to me as if the estranged wife was angry at being supplanted by her daughter and used the government to punish her husband. This looks like an example of the unholy alliance between feminism and an intrusive 'nanny-tyranny'. One need not approve of a behavior to feel that it is none of the government's business, but most people want the government to enforce their belief systems. In the west we gradually freed ourselves of religious tyranny, only to find the socialist/PC/feminist axis replacing god-and-his-priests (or, potentially worse yet, Islam) as moral 'enforcers'.