Posts Tagged ‘ bailout ’

Could Italy be next for EU bailout ? Strike 2 in new credit crunch .

Italy’s former PM Silvio Berlusconi has been sentenced to seven years in jail and banned from public office for having sex with an underage prostitute.This was the main headline out of Italy but there was also another that didn’t get much attention .Mediobanca, Italy’s second largest bank, said its “index of solvency risk” for Italy was already flashing warning signs as the worldwide bond rout continued into a second week, pushing up borrowing costs,less supply demand high = HIGH price )

The Italian macro situation has not improved over the last quarter, it has actually gotten worst . With a new anti austerity government , looks to get even worst .

Italy has €2.1 trillion (£1.8 trillion) debt is the world’s third largest after the US and Japan.but is only the world 8th largest economy .

Rank Country/Region GDP (Millions of $US)
1 United States 14,991,300
2 China 7,203,784
3 Japan 5,870,357
4 Germany 3,604,061
5 France 2,775,518
6 Brazil 2,476,651
7 United Kingdom. 2,429,184
8 Italy 2,195,937
Source -Wiki

Any serious stress in its debt markets threatens to reignite the eurozone crisis. This may already have begun after the US Federal Reserve signalled last week that it will begin to withdraw QE and the ECB Mario Draghi has also been pulling liquidity . The cracks has started with Sibor in China last week , could this be the start for round 2 of the global crisis ?

Mediobanca is particularly concerned about the gap that between yields on short-term bills (BOTs) and longer-term bonds (BTPs) near maturity that expire at the same time. BOTs retiring on July 31 are trading at a yield of 0.48, while the equivalent BTP is trading at 0.74pc. The reason is that BOTs are protected from debt restructuring.

Italian 10-year yields spiked to 4.8% .

The key number before was 6/7% that meant a country needed a bailout . Looking at the situation 5% / 5.25% is looking more realistic .

Could it be time to call ” Super Mario “ back again to sort it out . We could but the problem is in a democracy is voters vote with their heart and not there head which is totally understandable people need to live today as tomorrow is just a promise .

Lets see but I am calling this strike 2 , first one was China credit problem my blog on it :

1.Is the Chinese bubble bursting ?! Perfect storm ahead

Cash is king ,

Regards

Tony Evans
Tokyo

20130625-095055.jpg

Cyprus Bailout confirmed ! €10 billion 60% of GDP .

Eurozone ministers have agreed a deal on a €10bn bailout,

What i have seen and heard suggest the deal will include a levy on deposits of more than €100,000 in Cyprus’s two biggest banks.

Levi could be up to 40% !!!! For one of the banks, and also they could be split into a good and bad bank

What’s been said is that accounts under €100,000 will have no levi on them , but any above could have a Levi over up to 40% , this looks like a huge bitter pill for those account holders.

Also Cyprus has now have capital restrictions, so we have 2 systems in the Eurozones at the moment !!

One key element of the deposit tax, demanded by the IMF, is that it not require a parliamentary vote.

This is a $22billion economy Cyprus according to the United Nations they are the96th largest economy in the world and third smallest economy in the EU .

Jim O’Neill Chairman,Goldman Sachs Asset Management is fond saying :

China (at least in 2011) was creating the equivalent of another Greece every 12½ weeks. China creates another Cyprus every week.

So since the Banks in Cyprus has been closed China has created the equivalent of the GDP in growth!!

Tony Evans

20130325-110536.jpg

%d bloggers like this: