Can Italy, and thus the Euro, be Saved?

Discussion in 'Economy' started by JimBowie1958, Nov 25, 2011.

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Can Italy and the Euro Debt be saved?

Poll closed Dec 2, 2011.
  1. yes, they can and will save it

    3 vote(s)
    25.0%
  2. they could save it but will not for various reasons

    2 vote(s)
    16.7%
  3. no, the Euro and Italy are doomed to disolution

    7 vote(s)
    58.3%
  4. I dunno; Who cares?

    0 vote(s)
    0.0%
  1. JimBowie1958
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    JimBowie1958 Old Fogey

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    Italy collapse would be the 'end of the euro' - RT News

    Italies debt would seem to be the Gettysburg of the EU; they either win this or the whole thing gradually unravels.

    But can they save Italy? If they do, maybe they can stop the contagion where it stands.

    As I u nderstand it the growing problem is that the underlying poisonous real estate credit is destroying credit in Europe faster than it can be created.
     
  2. Toro
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    Toro Diamond Member

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    The eurozone can be saved if there are structural changes.

    But it won't survive as is if change is insufficient.
     
  3. william the wie
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    william the wie Gold Member

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    Maybe I misunderstand the politics but Bloomberg TV has been reporting that it will take a minimum of five years to change parts of the treaties to enable structural change.
     
  4. JimBowie1958
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    JimBowie1958 Old Fogey

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    And that assumes that they get complete unity in that reform as anyone member can block the whole union from doing anything, AIUI.
     
  5. cbirch2
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    cbirch2 Active Member

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    The eurozone has to have a functional lender of last resort. Structural changes would help, but the ECB should just do the job of every other central bank in the world. In general you need the perception that the ECB provides a backstop for rates to drop. Then you need lower spending in the GIIPS countries and higher spending in northern europe, mostly germany. And then you need slightly higher overall inflation, because slow overall inflation means deflation in the periphery, and deflation will cause a recession.
     
  6. JimBowie1958
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    JimBowie1958 Old Fogey

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    This map of Europe's debt/credit relationships would seem to suggest, in my mind anyway, that bailing out Italy with $2 trillion and letting Portugal, Greece and Irelands creditors take a 'haircut' just might work.

    But the bankers are the creditors and the bankers seem to be in control, and they are not known for their willingness to sacrifice for the common good, lol.

    http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2011/10/who owes what.jpg
     
  7. cbirch2
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    cbirch2 Active Member

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    Im not an expert, but i feel like the euro will break up before italy is bailed out. Its the third largest eurozone economy, it was supposed to be part of the foundation. If italy defaults french banks will take a big hit, your link illustrates that very well. And then you just have north europe, and you can just have half a eurozone, it wont work. Credibility will be destroyed.

    The problem is that the markets are begging for the central bank to do its job. Northern europe and conservatives in the US have been saying its all about budget deficits, now its becoming obvious that that wasnt true. Italy and spain had good finances before the crises, now italy is paying almost 8% to borrow. Prices on german bonds have even rose, and germany runs a surplus. The market is clearly demanding interest rates that would cover their loss from a return of individual european currencies, rather than simply viewing the balance sheet of the governments.

    If the ECB would just lend to the periphery hundreds of billions in unnecessary interest would be saved and italy wouldnt need a bailout at all.
     
  8. william the wie
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    william the wie Gold Member

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    I think the inability to make a decision will doom any strategy
     
  9. cbirch2
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    cbirch2 Active Member

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    Agreed
     
  10. JimBowie1958
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    JimBowie1958 Old Fogey

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    That would appear to be unanimous.
     

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