This week you will be able to follow free of charge a fantastic 'practical history lesson' worth hundreds of thousands of $$ if it was a Harvard course. Program: Tuesday The destitution of an old leader (Berlusconi), performed by IMF Wednesday The imposistion of a new leader, (Papadopoulos) performed by ECB Enjoy!
Yes, and of course he's blown millions on the parade of Italian beauties he's had to pay off to keep quiet over the years !
Berlesconi is not the issue. The bus goes over the cliff no matter who the driver is....Italy will have a high cost of debt that it cannot afford...immediately caused by the ridiculous Greek scheme that makes Sovereign debt impossible to insure (because CDS has been castrated) and thanks to Merkel and Sarkozy's reaction to the Greek proposal for referendum (think about that a move for Democracy coming out of Greece...how shocking), that they would kick Greece out of the EU, you now know that countries can leave EU and default...and demanding 50% haircuts from private lenders...is anyone surprised that prudent creditors and holders are dumping EU sovereign debt?... especially Italian. What do they think they are doing! These people are idiots...they might as well have taken out a tombstone ad in the WSJ...DON'T LEND MONEY TO ITALY! The Italian roll over of existing debt, post the Greek debacle, must now be funded by the ECB...provided China or Russia will loan the ECB the money.
18.54 Berlusconi will step down after the confidence vote on new budget in law in mid-November. 18.49 BREAKING NEWS Berlusconi will resign, says Italian president Giorgio Napolitano, with whom he met for an hour this evening.
But it has the effect of raising interest rates for debts to levels that no growth sovereigns cannot afford...please explain what market that is good for.
No, it doesn't, not really... It normalizes interest rates to their long-term structural and fundamentally justified levels. The fact that sov CDS is an off-balance sheet derivative that has allowed people to speculate in the mkt they shouldn't be speculating in is neither here nor there. The ability of sov CDS to slice up the various risks embedded in sov debt (separating credit from the other stuff) has a marginal and temporary impact on the long-run cost of sovereign debt, which is contrary to the myth perpetuated by generations of bankers (applied to many other financial products). Moreover, the positive aspect above is far outweighed, IMHO, by the lack of clarity, distortions and unnecessary volatility introduced.