The Markets TUMBLE

BBC News: Reports on the major slides in Shares in the UK and US, the fault line is the bad US economic news and the sovereign debt crisis in Europe. At close the FTSE-100 was down 191.37, that’s 3% down folks, in the US the Down Jones is down by 4%, nearly 500 hundred points down. The question that has to be asked is what has happened to our politicians, in the UK the House of Commons is in recess, also the US Congress. The UK PM David Cameron and his Deputy Nick Clegg are on holiday and in the US, President Obama is celebrating his birthday, the economic structure of the West is going down the drain and our politicians party, God help us all.

Silvio Berlusconi = The Speech that failed

Guardian: Reports that a Speech by the Italian PM to the lower House of the Italian Parliament has failed to sooth the markets, the article states the following on the speech, “ ..contained neither an appeal to the nation for painful sacrifices …..(or )..radical, structural reforms that most economists believe Italy badly needs. ” Lets be honest Mr Berlusconi with his various Court cases should not be PM of Italy at this minute, there are rumours of disagreements within the Government between the PM and the Finance Minister, hardly something that will calm the markets. Also if you’re a politician in trouble and Mr Berlusconi is in legal trouble you cant afford real harsh measures that would destroy your political base, just ask Obama how popular he is with his base after the debt ceiling agreement. Thus it can be postulated that the Berlusconi Government wont push the tough economic reforms that Italy needs and thus will need a bailout from the EU/ECB and the IMF. Thus the future default of Italy is down to its politics not its economy.

The Rescue - ECB

Telegraph: Reports that the European Central Bank is expected to announce on Thursday that it will buy the bonds of at risk countries such as Italy and Spain. The question that has to be asked will it be enough for the markets, should ECB not rescue Spain and just give limited support to Italy. What even if the ECB buys the bonds of Italy and Spain and it does not solve the problem, just crating more bad debt in the system, it might just give these Countries some economic relief over the next few months, but is it a long term solution, from 2008 European Government bailout out banks, but all it did was move the debt from the banks to the state, this is part of the reason that the Europe faces a Sovereign debt crisis. At some point the debt will be to much folks, when that shoe drops it will cause major disaster in Europe.

Italy to DEFUALT

BBC News: Reports that the Centre for Economics and Business Research a UK think tank has predicted that Italy will default due to its debt, it has predicted that Italy will have a debt of 150% of its GDP, while Spain will avoid default due to the fact that its debt is well below 100% of GDP. In other words the advice to markets, start to sell Italian debt, for any bailout of Italy the Germans will demand that the private debt holders take a major hit, thus markets its in your interest to sell Italian debt and not buy any more bonds. As Italy is a lost cause, the markets should support Spain, there debt = to GDP is 75%, thus this can be managed by the EU/IMF and the markets. At its most basic folks, the Market is the Doctor in A&E, it has two patients, both are damaged, but one will just about get through, the other wont, you have to make the right decision, keep the patient that going to live and let the more damaged patient go, it’s the hard fact we face today folks, Italy is a goner, there are no silver lining in the clouds folks.

6% Over a Cliff = Italy and Spain

Guardian: Reports the following on the Eurozone crisis, “ Interest rates on Spanish and Italian bonds rose to well above 6%,….the beginning of the bailout process for Greece, Ireland and Portugal. ”. It could be this stark folks, the cost for Italy and Spain to secure their bonds could just be to much if they stay at the 6%, its simple folks, there is to much debt, not enough money coming in and the welfare state is growing due to the austerity packages followed by Italy and Spain, it’s a vicious game folks, the money markets demand that the Government cuts its debt, this means less Government spending, less growth, less jobs, thus more of a welfare bill. This is mess that has no easy answer, the only answer in the short term is to bailout out Italy and Spain before they take down the whole of Europe. Its depressing folks.

Emergency for Italy = Debt

Telegraph: Reports that Italian Government is to have emergency meetings with the EU to discuss the fact that Italy could be the next country to become the target of the bond markets. The politicians should know that August is a very bad month to go on holiday, disasters of late seem to happen when politicians take their eyes off the ball, thus time for our distinguished Masters to come home and deal with the next crisis for the Euro. This blog will postulate that Italy will ask for a temporary bailout of billions, its going to cost folks. Well if the UK has to bailout out Italy it should come at a cost, the return of some powers to the House of Commons, our rebate be secure and agreed in treaty, lets make sure Italy pays for any UK bailout.

Spain and Italy in the Spotlight = Debt Risk

After Greece (2) Ireland and Portugal, then Spain and Italy, then the US, now back to Spain and Italy = Debt.

BBC News: Reports that the Spanish PM Jose Luis Zapatero has had to cancel his holiday plans after the cost of Spanish borrowing went through the roof, it was joined by Italy. The contagion of Greece has happened folks, the EU in the not to distant future will have to bailout Spain and Italy, this will take trillions, all EU countries including the UK will have to get their wallets out, its going to hurt folks, the tax payers are not going to be happy, it either bailout Spain and Italy NOW or later and its will costs even more trillions, the bad times are not over folks, its going to take years and mass unemployment and the cutting of the welfare state in Europe. A lot of suffering before the light folks.