Little update on Italy. The upcoming Prime Minister Conte is preparing his cabinet list. As you would remember two populist parties M5S and Lega have agreed on coalition and Prime Minister will be a lawyer with no experience in politics, Conte, It is expected that he will be highly influenced by M5s and Lega leaders. Also it is expected that he may assign Paolo Savona for the Ministry of Economy. He was an economist who was criticizing Euro continuously. For a moment its only a speculation but tensions in Euro are increased after he left Euklid…
Italy and why nobody buys the Euro:
by Teek, a doomsday prophet at heart, take it with a grain of salt.. or two:
Actualy, Italy is now the first EU nation that not only talks about ending “cheap money” and the “Euro protection politics”, but actualy does it.
Well, at least they announced really signifcant changes. Gurantee on minimum income for everyone, lower tax, rate hikes.
In short: Italy is taking a financial crash road. They verbaly backed off from the plans to leave the Euro, but the actual course they announced is nothing else.
The problem is the security agreements in EU. If they really take this route (which is good for the people, don’t get me wrong), the rest of EU must pay for it. And bailing Italy out will be an impossible task.
What follows if this really happens is: Spain will be next, then France… possibly the end of the Euro.
The real problem is: the ECB safes contries from crashing by buying the treasuries. They bought so many treasuries that they can’t “trade out” anymore.
Now, the longterm treasurie market is slowly beginning to shift. (a tradeout is impossible, the market would not only crash, it would cease to exist)
Means, the longterm bullmarket is shifting into a bearmarket. A market shift of this size is a “once in a lifetime” event.
Now, as this happens the ECB must buy more and more treasuries (into falling markets) to prevent the Euro nations from crashing if we need to bail out Italy, or others who will take the same route…
….and the only way to do this is: print more money, continue the cheap money policy that got us into the situation… pump more gas into the bubble, put more alcohol into the alcoholic to ease the shakes…
Problem with printing more money and low rates is: lower rates are not possible anymore, they are effective at zero. If they hike, we’ll see a major bank crisis across Europe. It’s not only going to be Italien banks or greek banks… the Deutsche Bank is still very weak, Bundesbank is extremely packed with treasuries…
If Italy goes this course, which is a very effective financial crashcourse, AND the rest of us needs to bail them out because of the stupid security agreements,
EU is fucked and we’ll see… well.. very interesting times, the next ten years….
And that’s why nobody buys this shit… pretty much
I never liked the Euro. Was a shit idea right from the start…
…means: we have not reached the bottom yet
PS: before any US guy goes “ha ha” now: you are owned by China!