Excellent post! Greece is the first country to experience the German "occupation". Spain, Portugal, Italy, Ireland are next. Greece, due to extreme corrupted politicians, was the first victim of the German "invasion". 1940's reply in economic mode.
What you say about Italian households may very well be true... But what about the state of Italian public finances? On the one hand, Italy's budget deficit situation isn't too bad here and now. However, Italy entered the crisis with the highest public debt/GDP of all the countries in the Union. Are you, as an Italian, not concerned about this?
http://news.bbc.co.uk/2/hi/europe/8450379.stm "Small bomb explodes near Greek parliament in Athens The attack is likely to be the work of one of a number of domestic militant groups, spawned after the riots of December 2008. Ratings agencies have warned they will downgrade the country's credit-worthiness again if there is social unrest or if the government fails to persuade the country to accept a programme of cuts. The bombers' message could not have been clearer - especially as parliament was sitting at the time - they were saying they could strike with impunity against one of the most heavily guarded buildings in the country."
In Belgium both the energy sector as the banking system for large parts have been taken over by their French counterparts. It has been rumoured Deutsche bank was interested in Fortis bank as well during the aftermath of the Lehman crash in 08 but they were told to back of by Paris as partially French speaking Belgium was clearly French territory. People don't really care because the country has always lived under the rule of some exterior force anyway but I can imagine public opinion to be different in places such as Greece or Spain. When you look at Argentina's collapse earlier this decade and see how for instance Spanish companies took advantage of that situation one would be atracted to the idea of what comes around goes around. The same could be said about the rest of the western world probably. We have been grown accustomed to the notion of hardship being a third world privilege for too long now.
This is so true. I have been studying international trade for years to help me in my trading - hopefully. In the case of Greece for example, Greek shipowners control around 20% of international dry and oil transport and that makes them extremely wealthy. Here is a website that lists some of the Greek controlled companies listed in NYSE and NASDAQ: http://shipping.capitallink.com/company/shipping.html also http://en.wikipedia.org/wiki/Greek_Merchant_Navy One problem is that Greece gave too much emphasis in shipping and these companies do not repatriate most of their profits but keep then in offshore accounts. Actually, most shipowners move and live in places like Monte Carlo and London. As a result, this wealth does not have any impact on local economy. It is in a way similar to what many US multinationals have done by moving production overseas. The situation is very complicated. It boils down to people analyzing the finances of countries based on local economic variables when we are actually talking about a globalized economy at this point.
No. Stop watching CNBS, stop reading the Financial Times. Seriously, from what I see happening in other countries, I'm glad to have my money and my business here. Public debt is actually private debt, it's the citizens that pay taxes for it, they are the ultimate debtors. Public finances are kept alive by households and corporations. That's why public debt/GDP rate has little meaning by itself, and you have to consider aggregate debt. Italian aggregate debt is one of the best, comparable to those countries that the "market" considers virtuous like Germany, and HALF of UK's. Italy didn't grow with debt like UK and USA, public debt/GDP has been around 100% for decades, since ~1985. There isn't an internal problem with mortgages here, there are not significant internal imbalances. Savings rate is one of the highest (15%, and in the past was 20-30%!). That and the extremely low debt allows families to keep their habits, and keep the economy running quite like before the crisis. Unemployment is growing, but not much (now 8,3%), house prices are falling, but not much (-10% at most ? and actually I'm quite pissed, because I sold in 2007 speculating to buy back cheaply...) Our business is significantly correlated to housing and costructions, but our numbers haven't worsened much, we still make good profits, no need to fire anyone. Read the last ECB bulletin, with risks to the sustainability of public finances in the euro area, banksters at the ECB agree with me here: http://www.elitetrader.com/vb/showthread.php?s=&postid=2669508#post2669508 Italian history from 1992 might be interesting for what's happing now in Greece or Spain: "Britannia boys" or "the Bilderberg" (whatever you call them) in 1992 gave us a big crisis, helped by Moodyâs: we were near default because banks deserted a bond auction, they wanted to take the italian Central Bank away from the government hands. And they were successful, they took the central bank (now an ex-Goldmanite is the boss). Goldman Sachs bought other big state owned corporations through privatizations with a few money. It was an historic rip off, our economy was nearly destroyed. Government imposed special taxes to avoid default. I remember that crisis as much worse for us than this one, and now I know that if the shit hits the fan(=some banks attack us again), the goverment can pull through anytime with some taxes: families do have the money (for the italian readers: be cool, it won't happen, it's only a theoretical extreme). So a question is crossing my mind: does Goldman Sachs have any interest in Greece or Spain ?
Breaking news: IMF to Send Team to Greece Tomorrow on Request of Authorities http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aIFC7zX3XTiI From bad to worse.
Let me say first. I mean disrespect to Greeks. That said I went there on vacation to Crete, and it was so slow and laid back no sense of urgency to get anything done. The travel agent was chain smoking with typing in for our hoover craft tickets to Santorini. It took her 3 minutes to type it in. But when you talking driving, my gawd! They drive like psychos. I guess it's all that stored energy. It's a great place to vacation and affordable even with a weak USD.
Please don't insult me by assuming I am incapable of independent critical thinking. Just so you know, my conclusions are based on analysis and modelling done by yours truly. It's not particularly difficult or sohisticated, but it took some time and work. With all due respect, your logic here is flawed. Allow me to demonstrate, in very simple terms. Suppose, with current circa 100% govt debt/GDP ratio and circa 0% rates, arnd 5% of GDP goes towards making interest/redemption payments on the current stock of debt outstanding. Now, suppose we take an aggressive case, where rates go to 5% and govt debt/GDP skyrockets to 200%. Now the govt will be using smth like 15% of GDP to service the existing stock of debt and rolling the funding becomes problematic. In the limit, the govt becomes insolvent (btw, a certain Eurozone sovereign (not Italy, obv) was pretty close to this situation during the liquidity crunch). Now what you say about tax receipts from citizens/corps is all well and good, but would these citizens/corps be willing to unanimously bail out an insolvent govt (e.g. make all the foreign creditors whole)? That's exactly what you're suggesting by netting off the public debt against household/private sector assets. And that is EXACTLY why pubic debt/GDP matters. As usual, it's not the economics, but politics that rules the roost, and - pls do forgive me - but I am somewhat skeptical about Italian politics (as a lyrical aside, in light of the above, Japan might be a most interesting test, if it ever gets there). As to the rest of your post, I completely agree with you that Italy, as it turns out, is actually in a pretty good shape, all things considered (so the 'I' in PIGS is Ireland). I won't argue with you about the usual Goldman conspiracies, as there's just no point. It is my personal view that Mario Draghi is an excellent CBanker. I certainly have a lot more respect for him than I do for other ECB figures (Bini-Smaghi, Noyer and Weber come to mind).
"While the per capita income appears low compared with other countries in the Euro zone, the fact that home ownership approaches 80% allows the Greek citizens a fairly comfortable life style. It should be noted that home owners pay no direct tax for their dwellings." http://www.greeklandscapes.com/travel/information.html