Comments on: You’d Better Move On

By: Dan

Dan — Mon, 20 Jun 2005 10:58:43 +0000

Brilliant post. And Edward,

“Ask yourself the question, which is more unthinkable Italy leaving the eurozone, or Italy making a sovereign default, and trying to stay in.”

Brillian comment.

By: psh

psh — Mon, 20 Jun 2005 09:04:37 +0000

Sure… Italy had to cook the books to get into the Eurozone in the first place, but whether or not they belong there, they’d gain nothing by giving up a liquid capital market with the world’s most cost-effective risk management instruments. Politicians can blame the ECB for painful & salutary market signals. To default at such a favorable juncture would require governmental stupidity of American magnitude.

And Non, so what. Your first constitution’s just a practice swing. We had a practice constitution too, the Articles of Confederation, equally feckless, if more concise. You’re lucky you don’t have to live with your first attempt.

By: CapTVK

CapTVK — Mon, 20 Jun 2005 02:54:51 +0000

“Ask yourself the question, which is more unthinkable Italy leaving the eurozone, or Italy making a sovereign default, and trying to stay in.”

I wonder if Italy leaving the Eurozone would solve anything. Most of the loans, bonds and obligations would continue to be listed in Euros. In fact most parties would demand that Italian government bonds continue to be issued in euros. Italy has plenty of historical/cultural artefacts which can be put up as extra collateral.

Meanwhile the new Italian lire would have to move in some sort of emu-like band to keep pricelevels stable against the other euro partners.

The real problem starts with valuta speculators. Italy would become a prime target several times in a row. The first few times they could sell off their national treasures, but once that collateral is gone…

By: antony

antony — Sun, 19 Jun 2005 17:14:21 +0000

Well this post is real situation describe, but ,next move, in Eur pairs didn’t express so it doesn’t worth nothing. Like politicans talking some fundaments with own thinking unitl now. Talk about future … that is ALL …

By: Edward

Edward — Sun, 19 Jun 2005 13:22:02 +0000

“then sovereign-debt risk premia for Italy increase”.

Well it may do, but at the moment the difference on 10 year bonds is only at 20 base points and widening slowly. At present the debt is effectively underwritten by the other countries. I’ve of a lot of posts on this, if you read around a bit you’ll se what my main arguments are.

Ask yourself the question, which is more unthinkable Italy leaving the eurozone, or Italy making a sovereign default, and trying to stay in.

By: psh

psh — Sun, 19 Jun 2005 07:53:46 +0000

If Italy breaches the Stability and Growth Pact in a particularly egregious way, then sovereign-debt risk premia for Italy increase. But why should that cause a crisis for the Euro?

If an event like that contributes to a Eurozone-wide slippage in fiscal discipline, maybe, eventually, the currency weakens based on fundamentals, but that’s no crisis.

I’m genuinely bewildered here.

By: Jake

Jake — Sun, 19 Jun 2005 06:56:55 +0000

Anne

All your posts are superb, too.

Simply splendid, as a matter of fact

By: anne

anne — Sun, 19 Jun 2005 02:29:19 +0000

All your posts are superb, Edward. I argue with them to myself repeatedly, and learn.

By: anne

anne — Sun, 19 Jun 2005 02:22:51 +0000

Superb post, and nice comment.

By: Ken

Ken — Sat, 18 Jun 2005 21:08:23 +0000

“Actually more than a clash between ?Europeans? and ?Free Marketerrs?, this is a question of what kind of relationship people expect between citizens and government and between government and ?market forces?. If we had a consensus on these two, I think we would find the opposition to a ?politically integrated Europe? would be a lot less than it appears to be. ?More political integration? begs the question of the relation between state and civil society.”

Yes quite right many Eusceptics are so because they do not accept the present setup.