PIIGS

[noirua]

Portugal, Republic of Ireland, Italy, Greece and Spain, are known as the PIIGS.
These countries are a danger to the whole financial system.

Yesterday Spain announced that unemployment had reached 20%. Spain depends on tourists, especially from Germany and the UK, and both have their own problems.

Greece are on the rack as its people are against the austerity measures required by the IMF and Europe. Germany with its own elections coming up, are balking at lending to them and prefer they leave the Euro currency.

US Banking debt: Portugal $9 billion, Ireland $82 billion, Italy $92 billion, Greece $18 billion and Spain $68 billion.

 

[drsmith]

World equity markets would be a lot lower than they are now if this was regarded as a serious short term threat.

 

[Julia]

When I hear commentators downplaying the relevance of the European problems, I'm reluctantly reminded of when the sub-prime debacle began.
Everyone was saying "oh, it won't affect anyone outside the US" and talked about how we were decoupled.

Then look what happened globally.

 

[zzaaxxss3401]

Imagine if we had 20% unemployment here. What are these people going to do if they have a mortgage, a family to support or other financial committments?

Option 1 - default on mortgage. Survive how best you can. Oversupply of houses on the market (by banks). Property collapse.
Option 2 - cross the borders, in search of employment. Oversupply of people where the employment is. Wage collapse.

Where would we go? New Zealand?

A snowball effect for both options. Outcome depression. Short-term issues of Government debt are one thing, but if you read the article in The Age over the weekend about the medium-term debt, it doesn't look pretty:
http://www.smh.com.au/business/counting-the-costs-of-a-eurozone-bailout-20100430-ty1r.html

 

[noirua]

When I hear commentators downplaying the relevance of the European problems, I'm reluctantly reminded of when the sub-prime debacle began.
Everyone was saying "oh, it won't affect anyone outside the US" and talked about how we were decoupled.

Then look what happened globally.

Quite right to remind us as we are only so keen to put on the blinkers. Freddy Mac is demanding more money from Obama and he just has to pay up. Spain is in increasing problems and Italy and the Eastern block may follow. Still, maybe the Euro will crash, already reversing, and that may help expensive Spain. Japan wobbled today as they rely on Europe.

 

[trainspotter]

Forget about the PIIGS What about the UK ??

http://www.telegraph.co.uk/news/ele...2010-Britains-finances-worse-than-Greece.html

The Government is due to borrow the equivalent of 12 per cent of the entire annual output of the economy, giving the country the highest budget deficit in the EU.

The deficit is now forecast to be almost twice the European average.

The commission said the “first thing” the new British government needed to do after today’s general election was to agree a “convincing and detailed programme” to deal with the country’s debts.

The official analysis will add to growing claims that the party leaders have failed to be frank over the scale of the public sector cuts required, whoever wins the election.

According to the Brussels economic forecasts, Britain will have the highest budget deficit ”” defined as the annual rate of borrowing ”” in the EU, at 12 per cent of gross domestic product this year.

This compares with an average deficit of 7.2 per cent of GDP in the EU and 6.6 per cent in the eurozone. In addition, Britain’s total accumulated debt will amount to 90 per cent of GDP by the end of next year.

The Greek budget deficit is 9.3 per cent of GDP, compared with 9.8 per cent in Spain and 11.7 per cent in Ireland.

 

[noirua]

Forget about the PIIGS What about the UK ??

The Republic of Ireland is one of the PIIGS in dire trouble. The UK has more longer term debts and retain a high rating for their currency partly due to this - some debt goes out to 2056 and they appear to be moving more shorter term debt out in that direction.

Australian debt is very low considering the potential going forward. The Federal Government makes much of it. 4.75% interest rates point more to Federal Government plans going a might off course rather than others decisions on interest rates.
Afterall, the Labor Government shot itself in the foot and staggered over the line to stay in Government, what do you expect after that - no light finger on the tiller and more a flat footed approach with Julia pretending to march all over the shop.

 

[nukz]

Forget the UK what about the US lol

 

[noirua]

Irish Banks are on the verge of collapse and markets are weakening in consequence. Germany is preparing to step in and bail them out to stop the collapse of the Euro.

The UK's Post Office has bailed out of the Irish Banks in favour of the UK due to the possible collapse of The Republic of Ireland today.

Take care my friends as markets open.

 

[Aussiejeff]

Irish Banks are on the verge of collapse and markets are weakening in consequence. Germany is preparing to step in and bail them out to stop the collapse of the Euro.

The UK's Post Office has bailed out of the Irish Banks in favour of the UK due to the possible collapse of The Republic of Ireland today.

Take care my friends as markets open.

Re: PIIGS - This makes a sobering read.. http://www.abc.net.au/pm/content/2010/s3068130.htm

I especially noted this bit..

..this is a process by which the world is adjusting to a period of lower growth. It's going to be incredibly volatile and there's going to be road kill.

Some dead roos and wombats littering the Highway paved with fool's gold??

 

[noirua]

Re: PIIGS - This makes a sobering read.. http://www.abc.net.au/pm/content/2010/s3068130.htm

That is indeed a problem in taking the bottle of medicine. Just as your debts start to drop your assets drop with them. Thus you're are worse off with higher unemployment and lower growth, if any.

Poor olde Ireland will have to take the medicine as every man and his dog starts drawing their money out.

If they'd followed my plan no banks or companies would have been bailed out and if people and companies lost out, Tough luck, that's how the cookie crumbles.
Other banks and companies would have picked up the pieces for peanuts, that's what Limited companies are all about; one lot fails and others turn up and hopefully get it right next time round.

 

[noirua]

The UK is playing down their involvement in The Republic of Ireland. All the UK's Banks are involved in the Republic and that includes The Royal bank of Scotland owned 87% by the UK Government and Lloyds Bank over 50% owned by them. The Germans and French know this and are playing the slow game knowing the UK through its controlled banks will have to pile in, yes the £s not €s.

Wont be long before Europe has a new round of quantitative easing following America. China will go on the defensive protecting their position and refusing to take the medicine when it is sick Europe and America who need it so badly - as they said themselves recently.

 

[prawn_86]

Once Ireland takes a bailout and if QEII happens in Europe then watch out below for the AUD. Despite being a strong carry trade at the moment, as soon as the bottom falls out the global economy the AUD will be sold off, no matter how well our economy is 'performing'

 

[nukz]

Portugal is on the brink of bankruptcy and there leaders are talking about creating a missile defense system that would cover all of Europe... these guys are total idiots let them all go bankrupt it would be for the best anyway.

Allot of these country's need to go bankrupt so the proper restructure is done.

The PIIGS mean nothing anyway, just wait till the big event when the US defaults(or rather prints there way out and causes hyper-inflation) that's the real main event this is just the introduction.

 

[SupaPuffin]

It's amazing how the market can run hot and cold on the same topic depending on the other things that are going on at the time - I saw some issues relating to missed debt payments in the Middle East the other day and no-one seemed to care - go figure - that was big news earlier in the year.

I think possibly the best blog on this is the uber bearish zerohedge - ww.zerohedge.com - I tend to be an optimist but read this for a bit of a reality check every day. Not that I endorse the site.

I suspect that the market may be looking toward the possibility of the contagion effect - a previous post suggested the market would be down more if it hadn't already been priced in - this is possibly fair but I think the issue is to see if there are going to be impacts in non-PIIGS nations which would have a much more significant impact.

 

[noirua]

Are there possible Asian and Far East PIIGS. Do Aussie Banks borrow that much from International markets. How much interest do Aussie Banks have abroad; NAB has interest in the UK's Yorkshire and Cydesdale Banks and Macquarie has vast interests in Europe. The Irish wallowed in victory but grabbed defeat in the nick of time - are Aussies in property about to do the same?

http://www.crikey.com.au/2010/11/16...llels-watch-out-theres-something-in-the-eire/

 

[nukz]

Are there possible Asian and Far East PIIGS.

I would say China, there gov is trying to slow inflation down right now and have even considered subsidizing food for its citizens due to cost increases..

Jim Chanos feels the same about this as well.

 

[Agentm]

turns out what paul said 12 months ago was pretty well correct hey!!

 

[explod]

The sheeple with interest and principal repayments have the problem but the problem for them has become too great.

So now the banks have a problem because the people cannot afford it anymore.

No country is really broke, its just the banks Ralf.

In fact the govmint in Australia could stick it up the banks by putting the Future Fund money into a Government Bank.

The Piggs so called is just a combination of the Wall Street desires to divert the attention. The latest last week was in tandem with a 2 billion debt raising.

Yep a true National Bank, 7% to borrow (fixed for life of the loan)and 5% deposit book. Like the good old days when I was at School.

 

[professor_frink]

http://pragcap.com/ireland-accepts-bailout

CAPITALISM WITHOUT LOSERS

Ireland has officially been bailed out and will likely agree to several more years of depression and austerity. Bankers win again and Main Street loses. The Bernanke put has now gone global. Central banks will never let anyone lose ever again. Now it’s only a matter of time before Portugal needs some aid – they might as well just start packaging the bailout tomorrow. Naturally, markets are rallying around the globe on this news. If no one ever loses then why would anyone ever be risk averse ever again?

What a mess. Capitalism without losers is like Catholicism without hell. Unfortunately, central banks around the world are creating a nice version of hell of on earth for many of the citizens they are supposed to protect.