tag:blogger.com,1999:blog-25064447.post458643589585519665..comments2013-09-12T06:30:06.298+02:00Comments on Spain Economy Watch: How Will The ECB Ever Manage To Stop Funding Spanish Government Debt?Unknownnoreply@blogger.comBlogger6125tag:blogger.com,1999:blog-25064447.post-4727912418048896402009-10-01T15:22:23.128+02:002009-10-01T15:22:23.128+02:00Within an Euro B scenario (not peseta), converting...Within an Euro B scenario (not peseta), converting spanish (and others piigs countires) debt to B could be much better accepted for the lenders than nuclear devastation. Is better 2 Europes, 2 currencies and the sovereign debt conversion (with a necessary controlled corralito), than other options mentioned. Isn't it?<br /><br /><a href="http://www.freshfamilyoffice.org/index.php/Econom%C3%ADa-y-Finanzas/la-union-monetaria-europea.html" rel="nofollow">"El titanic de la UEM"</a><br />(in spanish)<br /><br />Great blog, congratulations.<br /><br />Gurús MundiGurús Mundihttps://www.blogger.com/profile/01859237065446536051noreply@blogger.comtag:blogger.com,1999:blog-25064447.post-43625283279000772922009-09-20T09:12:50.981+02:002009-09-20T09:12:50.981+02:00Christopher,
"Spain leaving the Euro currenc...Christopher,<br /><br />"Spain leaving the Euro currency now is not being talked about too much but if things continue to deteriorate exponentially, I wouldn't rule this out as a possibility in say one or two years."<br /><br />This solution might *look* attractive in Spain (I say look, becuase I don't really think it is), but the other Europeans would never allow it. As one journalist wrly said to me, the Germans woiuld send the Panzers in first, since leaving the euro to restart the pesseta inevitably means default, and it would be German pension money that was being defaulted on.<br /><br />Spain will be made to pay, somehow or another, or at least people will try to enforce this solution, and won't give up easily.<br /><br />Naturally, whether an "internal devaluation" of the order that will be necessary is in fact possible, is another question, but then maybe people should have thought of that before embarking on the euro. It appears there is no draft blueprint for this.<br /><br />Anyway, I am convinced for the reasons I give that this approach will be tried, at least for a number of years. And if it doesn't work, then everyone should look out, since the result will be very messy indeed.Edward Hughhttps://www.blogger.com/profile/10384039867580949531noreply@blogger.comtag:blogger.com,1999:blog-25064447.post-29593914141535853202009-09-20T09:07:16.340+02:002009-09-20T09:07:16.340+02:00Hi ananymous,
"Edward, The Irish Times write...Hi ananymous,<br /><br />"Edward, The Irish Times writes about this same issue (but from Ireland's perspective) in today's..."<br /><br />Yep. Interesting. Reading the article I get the "feel" he had read my piece. In fact in Ireland at the moment they are only buying (or "appear" to be only buying) 26% - this is a much lower level than Spain. But then, as the author righly points out they will indirectly fund almost all the NAMA money (massive, up to 90 billion euros), so this will be the big one in Ireland.<br /><br />This is over 50% of Irish GDP (around 170 billion euros and falling). The Fondo de Reestructuración Ordenada Bancaria (FROB)- for reorganising the cajas - is supposed to be able to borrow up to 90 billion euros, but so far only has 9 billion injected by the government. And this number could be just the tip of the iceberg.<br /><br />Spain will get support from the ECB - as Ireland is getting for NAMA - but to qualify they will need to do some of the other things Ireland is doing, which is why I personally think Zapatero's days are now numbered, although I do not expect elections - just and ECB and EU Commission nominated "technocrat", or figurehead for a cabinet of technocrats. <br /><br />There really aren't too many options at this stage. The interesting thing to watch will be how the ECB plan to finance things if they start to take the massive financing for everyone off, since both Spain and Ireland (among others) will need longer term financing - you can't finsnce something like NAMA in the open market, and everyone in Spain should be following the NAMA debate, since it is clearly coming here.Edward Hughhttps://www.blogger.com/profile/10384039867580949531noreply@blogger.comtag:blogger.com,1999:blog-25064447.post-44266765245699987062009-09-19T20:47:00.234+02:002009-09-19T20:47:00.234+02:00Edward, The Irish Times writes about this same iss...Edward, The Irish Times writes about this same issue (but from Ireland's perspective) in today's paper: http://www.irishtimes.com/newspaper/finance/2009/0919/1224254861624.html<br /><br />BTW, thanks for the great blog.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-25064447.post-90934544008841417932009-09-18T10:50:54.109+02:002009-09-18T10:50:54.109+02:00Spain leaving the Euro currency now is not being t...Spain leaving the Euro currency now is not being talked about too much but if things continue to deteriorate exponentially, I wouldn't rule this out as a possibility in say one or two years. After all devaluation of the peseta was the weapon used before to get Spain out of an economic mess (effectively happening in UK now with sterling).<br /><br />Bailout is more likely as you say Edward but surely the ECB will demand as a condition that Spain puts its house in order and begins desperately needed reforms? That's when the fireworks will really begin. <br /><br />Chris.Unknownhttps://www.blogger.com/profile/02257921930390162567noreply@blogger.comtag:blogger.com,1999:blog-25064447.post-32042602527842989432009-09-17T19:25:33.871+02:002009-09-17T19:25:33.871+02:00¿So, the only usefulness of all that money has bee...¿So, the only usefulness of all that money has been a slightly lower yield of the public debt, and tiny profits from the carry?<br /><br />And banks have been loading on public debt...on a temporary basis (given the amount of foreign debt they have)....wait when they start selling and there´s no one at the other side.Eddyhttps://www.blogger.com/profile/02784479449460931133noreply@blogger.com