Looks like this is it, folks. Full-scale systemic economic collapse may have just started. I would very much appreciate it if this thread was kept open for serious discussion.
Just out, 45 minutes ago, From Ambrose Evans Pritchard of the London Daily Telegraph, (Ambrose Evans-Pritchard is International Business Editor of The Daily Telegraph. He has covered world politics and economics for 30 years, based in Europe, the US, and Latin America. He joined the Telegraph in 1991, serving as Washington correspondent and later Europe correspondent in Brussels).
[link to www.telegraph.co.uk
] Only Germany can save EMU as contagion turns systemic
'...Europe's leaders have finally run out of time. If they fail to agree on some form of debt pooling and shared fiscal destiny at Thursday's emergency summit, they risk a full-fledged run on South Europe's bond markets and a disorderly collapse of monetary union...''...The International Monetary Fund said there is now "serious risk" of eurozone contagion with "large" potential knock-on effects worldwide.
"Market participants remain unconvinced that a sustainable solution is at hand," it said.Suki Mann from Societe Generale caught the mood in a note to clients, asking whether it is "all over". "Eurozone politicians don't or don't want to understand that the eurozone as we know it is on the precipice. Greece appears beyond repair, Italy is on the brink, and the chances are that the euro might be no more very soon,
" he said.
RBS fears that Europe is on the cusp of "system-wide convulsion"
after yields on Spanish 10-year bonds reached post-EMU records of 6.34pc this week, and Italian yields topped 6pc. "We believe that Spain has entered the danger zone for yield levels," said Harvender Sian, the bank's credit strategist, who fears the "point-of-no-return" may be 6.5pc. "Given that Spain [and likely soon Italy] has entered this territory, there is a growing risk that a large systemic risk event is plausible in the near term and if not then in a matter of weeks."
The bank has called for a bail-out fund with 2 trillion of full lending power to stabilise the system, even if this risks pushing German debt levels above 110pc of GDP and causing apoplexy in the Bundestag.The bond fund Pimco has its own idea: throwing Greece, Ireland and Portugal to the wolves, and concentrating 1 trillion in "overwhelming force" to defend Spain and Italy. That major players should utter such thoughts shows how fast events are moving.
For 18 months the EU has treated the serial crises on the EMU margins as liquidity headaches. It hoped that time would slowly lift the distressed debtors off the reefs, while the penal terms of "Ultima Ratio" attached to bailout loans would deter other EMU states from seeking help. "Shock and Awe" rhetoric would do the rest.
The strategy has failed because it did not acknowledge that the deeper crisis is a North-South structural gap that has left half the eurozone with variants of 1930s debt-deflation, a condition that cannot be solved by austerity measures or by any one country alone."We are approaching the endgame for this part of the European sovereign crises:
the number of cans that now need kicking down the road would challenge the left foot of Lionel Messi," said Gary Jenkins from Evolution Securities. "The chances are that the EU will only take the step of fiscal union or common bond issuance at one minute to midnight on a weekend when it is clear that the system is close to collapse." ...'
For more, see link above
If you're in Europe, I recommend you get your savings somewhere safe right now.