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Week Ahead: more ‘rearranging deck chairs on the Titanic’?

Still reeling from a sell-off in equities over global growth and debt fears, investors will turn to policymakers for answers.

 
Week Ahead: more ‘rearranging deck chairs on the Titanic’?

Still reeling from a sell-off in equities spurred by fears over global growth and debt, investors will next week focus on efforts by policymakers to prop up the world economy and resolve Europe’s fiscal crisis.

Markets are approaching a stage when central bankers will start to panic, according to Trevor Greetham, asset allocation director at Fidelity. ‘And there’s an old adage that when central bankers start to panic, the markets can stop panicking,’ he added.

Greetham’s comments came after the Federal Reserve warned of ‘significant downside risks’ to the US economic outlook, as it unveiled a new stimulus measure whereby it buys long-dated US debt funded by selling short-term paper. In the wake of the statement, global stock markets slumped.

Cash for Greece

‘To some people, I think, that’s a bit like rearranging deck chairs on the Titanic,’ the Fidelity director said of the stimulus. ‘They want more money printed, and with commodity prices dropping, my guess is that they’ll get it sooner rather than later.’

Meanwhile, as many as eight countries may approve changes to the eurozone’s bailout fund next week – offering a catalyst for ‘modest improvement’ in markets, said Michala Marcussen, global head of economics at Société Générale.

But she added that the suspense over whether Greece receives the next €8 billion (£7 billion) chunk of bailout cash was unlikely to be ended before a meeting of eurozone finance ministers on 3 October.

And analysts at Royal Bank of Scotland pointed out that Europe’s banks were likely to remain under pressure amid mounting fears over their exposure to eurozone debt, warning in a note of a ‘risk of widespread equity issuance’.

US growth figures

Investors will also scrutinise a slew of US economic reports for clues as to whether the world’s biggest economy is slipping back into recession. Monday will see figures on new US home sales, while data on consumer confidence is due on Tuesday, to be followed by a report on durable goods orders on Wednesday and US gross domestic product on Thursday.

‘The data are expected to show the US economy barely growing, with the consumer sector and housing markets under particular pressure,’ noted Chris Williamson, chief economist at Markit.

In Britain, figures on retail sales are due on Tuesday, while reports on consumer borrowing and mortgage approvals are to be published on Thursday.

The week will also see a modest number of company announcements.

Domino’s Pizza and software firm Misys (MSY.L) are set to publish interim management statements on Wednesday, when Man Group (EMG.L), the world’s biggest listed hedge fund manager, is to make a trading announcement.

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49 comments so far. Why not have your say?

stormdog

Sep 23, 2011 at 19:20

'When bankers start to panic......................'

European bankers will do more than that when we get to USD/EURO parity.

In less than nine months time is my guess.

By then the euro may no longer exist in its present form anyway.

Whatever happens great opportunities now exist, there are veritable fortunes to be made by the brave.

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Maverick

Sep 24, 2011 at 08:17

At a time like this we will all need nice unhealthy comfort food like pizza - buy Domino's now!!!

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Mr Grumpy

Sep 24, 2011 at 10:43

I would normally attempt serious comment on this blog but I'm afraid I've reached gloom saturation point - far too much commentary from supposed experts who really haven't the first clue where things are going on the High Street never mind globally.

So --- I'm hanging onto my stocks and probably going to buy more on the back of all this ridiculous panic.

"Experts" --- SOD OFF!!

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Robert Court

Sep 24, 2011 at 18:35

Mr Grumpy

I misread and thought you wrote you were hanging onto your SOCKS and probably buying more from the High Street to keep you warm this winter!

:)

Very good time to buy, I agree.

Unfortunately I've just maxed out on my buying spree of the last couple of weeks, but at least the investment income should keep rolling in and I'm optimistic that I'll make some substantial capital gains within the next six to twelve months.

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Harry Brooks

Sep 25, 2011 at 12:57

A few weeks ago Angela Merkel shrugged off the negative market reactions by saying that the Eurozone was a political issue not a financial one, and that the politicians would not be swayed by the markets. This deeply revelatory, and I'd say unwise, remark was the most alarming comment on the situation that I have heard from anybody near the centre of the crisis. First, it betrays a dogged determination to keep on digging the same hole deeper. Secondly, it displays utter disregard for the situation on the ground, where millions of people are being made to suffer for the politicians' intransigence (and will continue to suffer for years). Thirdly, and perhaps most illuminating - and alarming - of all, it also betrays, in my view, a total ivory tower lack of awareness of the influence of the markets. I might be wrong (and no doubt someone out there will point it out if I am) but I don't think that, in the entire history of capitalism, there has ever been any government, anywhere, that has successfully defied the markets. So, whatever they decide to call it in order to save face, the Eurocrats will be forced to do what the markets want. The bad news, of course, is that it will not be done quickly and, when it is done, the ripples will spread far - and for a long time.

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Fred

Sep 26, 2011 at 08:07

I tell you what I advocate, Greece leaving the Euro and adopting a new Greek currency at parity with the Euro which they then allow to float. Meanwhile the IMF need to shore up the Euro Banks instead of sending good money after bad and we need a referendum on whether we wish to remain in the EU. or take the Swiss approach and simply adopt trade agreements (surely the best road forward for Britain?) Let us hope that at the next round of elections that the world starts to get politicians with a backbone. It all reminds me of a history lesson discussing European politicians in the years leading up to WW2. How very depressing.

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Stella Arman

Sep 26, 2011 at 08:11

Angela Merkels comment on the Euro crisis being a political one reflects her own political future. Regardless of what is blatently obvious around her, she wants Germany to be the super power of Europe. She either ignores good advice or disposes of opponents. This reminds me of both Stalin and Hitler only this time with lipstick and handbag.

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David White

Sep 26, 2011 at 08:30

Why is the euro so strong against sterling and the dollar?

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Ed the Banker

Sep 26, 2011 at 08:31

From the comments it is all clear that the people get it, but the politicians don't. Of course they have their reason. They have to stick to the "high cabal".

Very correct as Mr Harry Brooks says above also very right as Fred is saying this is all "déja vue", as this whole crisis is déja vue.

The evening for the invasion of Normandy, Churchill said, "the high cabal brought us here". I am much afraid that history will repeat itself.

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Anonymous 1 needed this 'off the record'

Sep 26, 2011 at 08:42

a wild thought for the day,are we building another Greece north of the border.....

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Harry Brooks

Sep 26, 2011 at 08:57

Yes, one can draw parallels with the late 1930s. However, be aware, this time we have no Spitfire, no Churchill — and the Yanks are in no position to help.

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Harry Brooks

Sep 26, 2011 at 09:17

Oh...I forgot, maybe we can also paraphrase the great Winston here — 'never in the field of human finance has so much been owed by so few to so many'...

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joe stalin

Sep 26, 2011 at 09:21

Preservation of the status quo wrt to Europe is all that matters. The Germans need a stronger Euro like a hole in the head hence Greece will not leave the Eurozone. Merkel's opposition is even more in favour of keeping things the way they are. merkel is just playing to the gallery and playing hardball.

Why is Sterling so weak against the Euro? because we in are a coalition with a a political party that has a history of being on the lunatic fringe of society. The Government is back-tracking on bank reform because they have come to realise that shutting the stable door after the horse has bolted is futile. The next financial crisis will not be avoided by what has been proposed by Vickers.

LOL even Eddie Balls is now talking at selling bank shares at a profit to plug the hole in our finances. He should know as he had a hand in leaving the hole for us. But hey, maybe I am in favour of tough medicine George will listen to his speech and think maybe Eddies plan has some merit: "Yah lets get our banks lending again and lest see them return back to profitabily". Now that's a revelation!. Commodites are being trashed now because everybody that crowded in to the ETF cinema has discovered the doors have been locked behind them and there is a smell of smoke.

For your next crisis look no further Nightmare on ETF street is already showing in a cinema near you

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Fred

Sep 26, 2011 at 09:30

Joe, Balls hasn't got them, that's the trouble but you are right of course, especially the ETF and Merkel playing to the Gallery. She certainly doesn't want a stronger Euro and secretly would love a Dollar parity but she is playing dangerous games here. She is obviously prepared to sell her sole to the devil. Still laughing at Harry's last post too.

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Chris B (Slough UK)

Sep 26, 2011 at 09:55

I wouldn't worry about the lack of spitfires, thanks to the US tax payer the CIA has 6000 Drones just waiting to pick off any dissenters, oh shouldn't I have said that? Boom!

But less seriously so they Bail out Greece and in 3 or 6 months time, then when they come begging again? Everyone as someone said everyone knows that they have to let things unwind, so the question we should be asking is why won't they? Either way it's gonna happen. I guess the politicians just cannot accept the fact that they are really powerless in this regard. Ironically it is all their own doing. They would do well to remember it is only because of the people that they hold their positions. What happens when any government no longer represents it's people? As the saying goes: Those whom the gods wish to destroy they first make mad.

Keep spending governments, spend spend spend all the way to nowhere.

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joe stalin

Sep 26, 2011 at 10:06

Anonymous I think More like a Venezuela than Greece as Salmond's reasoning is not dissimilar to Chavezes same delussionary nonsense.

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Harry Brooks

Sep 26, 2011 at 10:38

Re: Chris B's comments, one of the things that seems to be muddying the Euro waters is that so many of the decisions are being driven by people who were NOT elected by anyone. Indeed, I have read that, unlike Osborne, most of the so-called finance 'ministers' at the recent G20 were non-elected technocrats, Eurocrats...some kind of crate, anyway. Or should that be prats?...

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orchardsparks

Sep 26, 2011 at 10:46

Some years ago I commented to a friend, who is a keen historian, that if at some point in the future the UK were to leave the EU it would lead to war. I was drawing an analogy with the American Civil War but my friend accused me of talking rubbish.

Another friend was recently in Madeira talking to Germans and Portugese about the Euro crisis. He suggested that a breakup of the Euro was likely. Both Germans and Portugese to his surprise suggested that this would lead to war.

In this context Greece outside the Euro would be in a similar position to the Weimar Republic and we all know what that led to!

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Jonathan

Sep 26, 2011 at 11:13

All the money that exists including all the money that they have been printing for the last 3 years still exists. It has to be spent on something so where has it all gone?

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Stella Arman

Sep 26, 2011 at 11:22

Nobody wants another European war! Obviously people must be informed that unless Germany, Austria and Netherlands pull out of the Euro and count their losses, allowing the others to devalue and rebuild their economies there will be another war! Germany are hanging onto their export advantages and political control!

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Stella Arman

Sep 26, 2011 at 11:23

Jonathan, I think the money is lying in off-shore tax havens waiting for better days!

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Jonathan

Sep 26, 2011 at 11:31

Stella, With the next round of money printing it's going to be worth even less so little point in hanging on to fast devaluing cash.

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Harry Brooks

Sep 26, 2011 at 11:47

In the last couple of hours we've gone from discussing Greek debt to preparing for war. Time to take a break and have a coffee, tea, tisane, cold shower...anything... I wish I'd never mentioned Spitfires.

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Ted

Sep 26, 2011 at 13:01

Anon 1 and Joe Stalin,

If you are going to drag up old discussions.....Scotland will be the only country to have discovered oil and ended up poorer afterwards. If Scotland had gone it's own way rather than sticking with an old, and tired union, there is no reason to doubt that nowadays it would be on a par with Norway (the richest per capita people in the world). Same population, same amount of oil.

Scotland did not go it's own way, whether through misguided loyalty to an old order or the concerted campaign organised by the government to scare people to vote against independence.

So here we are with Scotland as poor as the rest of the UK, tied to a country spending Scottish taxes on it's delusions of global power and influence, which itself is a reluctant part of a larger union, a union which is taking the power of decision making away from their domestic politicians. Just thank your lucky stars at least English people are not taxed directly by this larger union. Then you will be entirely in the power of others. Welcome to Scotland's world.

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Harry Brooks

Sep 26, 2011 at 15:16

Er... did Scotland discover oil?

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Harry Brooks

Sep 26, 2011 at 15:22

Regarding the Eurozone and its (OH, YES, I'VE BEEN MEANING TO POINT THIS OUT FOR AGES — PLEASE NOTE THAT THE POSSESSIVE 'ITS' DOES NOT REQUIRE AN APOSTROPHE. THE APOSTROPHE IS ONLY USED WHEN 'IT'S ' IS USED AS AN ABBREVIATION FOR 'IT IS').

Right, now that I've got that off my chest — regarding the Eurozone and the value of its contribution to the general good, you might be interested in the following ... Pythagorean theorem: 24 words, Lord's prayer: 66 words,

Archimedes' Principle: 67 words, Ten Commandments: 179 words,

Gettysburg address: 286 words, US Declaration of Independence: 1,300 words,

US Constitution with all 27 Amendments: 7,818 words

EU regulations on the sale of cabbage: 26,911 words...

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Whatisname

Sep 26, 2011 at 16:18

Harry,

What would the EU spend our taxes on if it were not paying armies of part timers on generous pay and pension to produce useless laws regimenting every aspect of our daily life. These part timers are threatening to strike having been asked to work 40 hours per week to help with budget constraints. I hope they find they are not missed and appropriate steps taken. I saw this happen once in a large factory.

On the main topic, the Euro is a politically driven project to help achieve the aim of one common economic policy across the EU without anyone having to worry their little heads about voting for it. We are not the only country where the electorate do not share the consensus of their leaders.

Given this overriding aim of our elected and non elected EU master they cannot allow Greece to default. But they cannot find a way of stopping it defaulting apart from throwing more money at it every time it runs out.

I have also been buying but I do worry that there is further to fall when the Masters of the Universe start panicking.

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Chris B (Slough UK)

Sep 26, 2011 at 17:19

Confucious summed it up: "He who will not economize will have to agonize".

Well you would have thought they would have learned by now!

I think we've all heard many of the arguments before and valid most of them are. I guess the reality is that we are drowning in the incompetences of our leaders and that's a hard thing to take. They lead by duplicity and expect us all to swallow all the talk they keep giving us. Anyone who dares put their head above the pulpit is summarily shot. The media go along with circus and the whole farce is allowed to continue. Meanwhile even though Joe public knows throwing good money after bad is worse than a waste of time, we are still sold a line of bull that it is all necessary. Yet no-one believes them. So who do they think they are keeping the illusion for? Little wonder it is all falling apart.

Our greatest glory is not in never falling, but in getting up every time we do.

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Harry Brooks

Sep 26, 2011 at 18:00

I'd say Chris is spot on. It IS all a duplicitous mess based on the mad fallacy that all countries are equal - or, if not, they can become equal. When the Deutschmark was switched to the Euro, it was given an irrevocable exchange rate of 1.9558 D-Marks to €1. When Greece entered the Eurozone, the rate set for the Drachma was 340.750 Drachmas = €1. One might infer from this that the authorities regarded the Greek economy as being about 170 times less effective that the German economy. Yes, I know, this is simplistic in the extreme. But it makes the point that Greece was, is - and probably always will be - a long way behind Germany in terms of industry, drive and economic competence. Leaving aside anti-Greek blame and criticism, the point - the very obvious point - surely is that Greece isn't Germany and Greeks aren't Germans. The idea that they can manage their affairs in the same way seems ludicrous to me. I'm sure we all know this but I never hear anybody acknowledging it. The Euro elite just keep on (as Chris says) lending more money to stave off the evil day. Worse still, people suggest that the solution is fiscal unity. But, surely, this would just be to dig the same hole deeper. It merely ties the Greeks (and the Italians, Portuguese, Spaniards, Irish...) to a treadmill that they can't keep up with, and makes them all slaves to the German will. You might as well decree that everybody will now start eating sauerkraut and liverwurst instead of moussaka, tortillas, sardines, pizzas, escalopes, soda bread and mussels.

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joe stalin

Sep 27, 2011 at 06:35

With all the media hype it is easy to make what is going on at the moment in Europe a catastrophy waiting to happen. I am no Europhile and More than happy to be sitting on an island muddling on with a raft of problems of our own making. The point here is is that Greece not before time is being dragged kicking and screaming in to the headmaster's office. the fact that from a tax prespective there are only 20 registered millionaires, or so I have heard, is just plain stupid. Greece has to confront its upper and middle class tax dodgers and shift the tax burdon more equitably across its society. It is entirely understandable that the wealthy Northern European states want to see this happen and wean Greece of La Dolce Vita. Europe at long last is beginning to reckognise that if it is to succeed as a viable entity a certain measure of common discipline will have to be adminstred for it to have a chance of working. Europe will put ist defences in place to scare off the financial parasites circling the zone at present.

Lets hope we can shore up our defenses as effctively when they looking for their next prey.

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Stella Arman

Sep 27, 2011 at 06:50

Greece has only 20 millionaires registered because the rest are registered in Cyprus where corporate tax is only 10%!!

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joe stalin

Sep 27, 2011 at 07:20

That was my point entirely Stella. The difficulty they face is how best to reel them in to the extent that they at least channel some of their earnings through their tax system. In some ways though, Greece's problem is not unique. The US is trying to do the same as are we here with te non doms. It seems that the situation in Greece is even worse than it is here.

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Stella Arman

Sep 27, 2011 at 11:23

Joe, It would be a far better idea to make a global flat rate of 15% for all company taxes perhaps? No escape for anyone?

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joe stalin

Sep 27, 2011 at 12:00

Stella you are right a flat tax is by many seen as the answer to evasion and I think it has some merit beyond that often cited by academics. If the rate is low enough such as 15% for example it probabaly would be worth going to expensive lenghts to evade paying it. In the case of Greece and the issue of Cyprus as a tax domicile, you would have thought that in the era of new enlightenment between Greece, an EU member country and Turkey an EU wanna bee member, to put some economic as well as political pressure on Cyprus to make the likes of Asil and his mates to cough up a few readies.

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Harry Brooks

Sep 28, 2011 at 11:05

How about putting the philosophising aside for a minute and taking a look at the reality? According to some quick research I've done, Greece currently owes $374bn, which is around €274bn. The long term rate on Greek bonds, (according to the European Central Bank) is 15.90%. That means Greece has to pay €43bn a year in interest ON ITS CURRENT DEBT. That's before it has the extra loans it says it must have quickly to pay its public sector workers, etc. (I'm told that 1/3 of the Greek population - over 3m people - works for the Government one way or another but it seems an unreal number).

Anyway, as we all know, the loans are frequently called 'bail outs' but, of course, when you look at these numbers, it's clear that the lenders are actually bailing more water INTO a sinking boat.

Greek GDP was around €227bn in 2010 (lower now, of course) so, Greece has to spend more than 20% of its GDP just to repay interest on the current loans at the current rate. (And I've even seen interest rates of over 20% quoted, which would mean repayments of €55bn - more than 25% of GDP).

(I also read somewhere that it now costs €462,000 to insure €1m of Greek debt but, even in this nonsensical situation that seems TOO fantastic).

Anyway, I'd say it's going to take a lot more than taxing a few offshore millionaires to get the money together to sort this lot out.

The bottom line is that it's surely an impossible situation. So, we must not be surprised when the Euro technocrats and politicians (especially the currently jittery Germans) appear to dither. They ARE dithering. I think we all would. It seems to me that the reason is - they can't solve this one. Now or ever. If they keep lending the burden will just get more insupportable. And, if they let Greece default. who will rush to lend more? And at what price? And how long would it be before the situation repeats itself? (Answers on one side of one - very small - piece of paper).

Now, maybe someone would like to do the maths for Italy, Spain, Portugal, Ireland, etc., and we can all reach for the goodbye pills...

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Jonathan

Sep 28, 2011 at 12:52

Just about the whole Greek nation is corrupt. There were only 324 swimming pools in Athens (they are taxed); that is until someone looked on Google earth and counted over 16,000 of them: http://boingboing.net/2010/05/04/satellite-photos-cat.html . The doctors are corrupt claiming much lower incomes than they get in reality. The government workers get over €100 a month extra just if they have to use a photocopier. The government lied about their financial situation just to get in the Euro, they lied about there financial information leading up to their default. What is happening, it seems like a bad dream, why can't they just come out of the Euro but stay in Europe, just like the UK and print as much as they like of their own money and have massive inflation, just like they used to?

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Harry Brooks

Sep 28, 2011 at 14:22

Well, Jonathan, I guess we all know that Greece could do that but the Euro elite won't let them because it will make the Euro experiment look like a failure, and we all know how politicians feel about looking a failure...So, on and on we go...

And, I have to say it again, Let's look at the reality. How can Greek debt be solved just by getting everyone to pay the right taxes? The Greek population is about 11.3 million. The working population is about 50% - 5.6m. To pay back that €274bn of sovereign debt they'd all have to pay €48,928,571,428 in tax EACH. Assuming they all got stuck in and had a real go at it, how long would it take those people to pay €48.92 billion EACH?

Yes, I know nobody seriously expects the problem to be solved just by sorting out the tax corruption (even though it often sounds like that) but I do feel that all the arguments, prejudice, philosophising, wearying re-statements of entrenched views, and so on, just simply miss the fundamental point. How we ever got there is almost irrelevant. We're there, and THE NUMBERS ARE TOO BIG.

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Jonathan

Sep 28, 2011 at 15:09

@Harry

Ok, as someone once said "we are where we are" but their past form should be taken into account. Also, they are going to default one way or another, when the debt becomes unsustainable default of some form is inevitable. Instead of the banks losing money from their loans the ECB is going to print the money to pay the private banks so the private banks don't lose out. Again it really is a no risk operation for private banks to lend money, the state will use socialism to rescue capitalism. The central bank bankers will have often worked in the past for the private banks they are rescuing which could be seen as a conflict of interests.

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Harry Brooks

Sep 28, 2011 at 15:30

Yes, well, clearly they'll have to do SOMETHING.

And let's not forget that we must all acknowledge an element of self-interest in this. I don't know about you or the other contributors to this debate but my portfolio has taken a substantial hammering as a result of all this Eurozone nonsense. And, may I say, I am fairly conservatively invested so, God help anybody in anything higher up the risk scale.

So, a big part of me is saying: 'stuff the Greeks. Just do something, ANYTHING, as long as it calms the markets for a year or so'...

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Harry Brooks

Sep 29, 2011 at 08:13

ERROR NOTICE ...

Those of you who might have read one of my earlier posts will have spotted a bizarre arithmetical error (and a timely warning to all of us not to try and do two things at once). I suggested that, to pay off Greece's debt by tax collection, everybody in the working population would have to contribute €48.92 BILLION. Ludicrous, of course. I should have said €48.92 THOUSAND. Sorry about that.

Still an unlikely sum to be collected, though.

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Harry Brooks

Sep 29, 2011 at 08:18

OH, AND ...

I see that the EU and IMF are about to audit Greece's finances.

So, we should soon have a more definitive picture.

As long as their maths is good...

...and as long as they don't drop too much fudge into the calculator.

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Chris B (Slough UK)

Sep 29, 2011 at 09:10

On the bearish side, Gold went to somewhere around half the current value in the 'last' recession. It went down with all other asset classes.

Recessions/Depressions are deflationary environments, so this can at the very least mute Gold's upside even with the money printing for a while. However the environment we have experienced so far is one of stagflation.

I would say I am short - medium term bearish on Gold and long term bullish.

The value of Gold has already fallen a good way from $1900+ down to as low as $1523ish. That's a 20% drop. If it fell 50% from where it is now, it would be at $810.

It is one thing to be holding Gold bars or coins, it is another if you are holding a time sensitive instrument such as options.

One should never fall in love with any asset class, because once sentiment turns the other way then the price will follow.

If as it seems likely we are re-entering a recession or heading into a depression, then it would seem most likely that the way for Gold's price is down. In that case at a guess it could take 8-15 months to return to the high. However when it rebounds from the bottom, it will likely come back very strongly.

For speculators, I would say we most probably haven't reached bottom yet. Saying that though, if the Greece 'bailout' gets the go ahead, then we will likely see a good rally in stocks which will lift gold again. This can only be a short-medium term thing. As we all know, they cannot keep pumping money into the leaky boats forever. Something ultimately has to give.

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Jonathan

Sep 29, 2011 at 10:15

@Harry,

Their maths is good, they descend from the likes of Euclid and Pythagoras, it's just they are just corrupt and don't pay any taxes and the central bankers don't want to see their baby, the Euro, fail.

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Whatisname

Sep 29, 2011 at 12:41

Harry,

Are you able to work out how much each UK employee owes for our debt mountain?

I do feel that the title of this thread is incorrect, it will take more than a week for the Eurocrats to come up with the latest deckchair plan. It all looks like Black Wednesday all over again, only this time we are in a lifeboat but it may be sucked under when the Titanic sinks.

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Jonathan

Sep 29, 2011 at 13:53

@Whatisname

In December 2010 this country's net debt was £2.3227 trillion

http://www.statistics.gov.uk/pdfdir/crbslbg0111.pdf

That is a debt of £93,000 per household. This doesn't include the additional PFI debt that we will be paying back for the next 30 years. Add to this amount any debts/mortgage your household has and also take into account that there are many households who's occupants are pensioners or non-working.

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Stella Arman

Sep 29, 2011 at 18:28

The Greeks could sell their assets as part of their repayment.

Airports, railways etc, an island or two...only they don't want to as obviously Germans owning a Greek island for eg would be historically extremely painful.

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Jonathan

Sep 29, 2011 at 23:31

They could just do what Iceland did and tell everyone to get stuffed. It wouldn't stop me from going on holiday there. Of course they would have to elect a new government which might not go down too well with the current one.

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Harry Brooks

Sep 30, 2011 at 10:41

Come on, guys. We're just playing the same song over and over. Whatever is the best solution isn't going to happen. The situation's just going to drag on with the politicians way behind the markets — the latest word out of Germany is really only a re-hash of last year's idea — and it's hard to escape the view that this dithering is a deliberate strategy...

Like many, I think the politicians are trying to drag this out for at least another two years, and not just for the sake of Greece (I think they think Greece is a lost cause) — in my view, it's mainly to give Spain and Italy time to prove THEY are financially viable. If they can, the suggestion is that Greece can be allowed to default without fear of contagion (Portugal might follow Greece out of the Euro but that's looked on as a fleabite)

However, this is all brinkmanship of the highest order since: a) it is very debatable that Spain and Italy can prove their economies in two years, and: b) there might not be two years anyway because the level of Greek interest rates - over 20% - shows that the markets think Greece will default much sooner. And, even before such a default happens, the rates on Italian and Spanish debt could rise very sharply.

Now, this is not all my idea. I have read around some specialist views.

But I agree with it and it underlines (as I suggested in an earlier post) that the Eurozone elite are likely to learn (like many before them) that you can't fool or beat the markets...

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David White

Oct 02, 2011 at 21:46

Why is the euro so strong against sterling and the dollar?

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