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Harsh Austerity Sends Italian, Spanish Debt To Record Highs
Damn you debt-reducing austerity-that-is-blamed-for-everything-that-is-wrong-with-Europe's-triple-dip-recessionary-economy-when-it-is-the-corrupt-socialist-incompetent-politicians'-fault. Damn you to hell! Oh wait a minute:
- Italy’s government debt rose to a record €2.169 trillion in July from €2.168 trillion in June, the Bank of Italy says in its public-finances supplement.
- Spain total govt debt amounted to a record € 1.01 trillion in 2Q, up from € 995.9b in 1Q, Bank of Spain says; 2Q Total Govt Debt Rises to 98.9% of GDP From 97.4% in 1Q
With austerity like this, who needs to spend like a drunken sailor?
Source: Bloomberg
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Are they using Apple Pay yet???
Long pitchforks.
Seems the south of Europe are the only ones getting screwed with this austerity. I would'nt be surprised if they start lynching German Diplomats.
France isn't doing so well either. Unemployment up to 10.2% in spite of lowering taxes on employers.
High Unemployment = Civil Unrest
Esp when most unemployed are restless, strong, anxious yutes. It’s my guess that’s why gubmints arming themselves as in merika with billions of rounds of ammo, armoured vehicles, etc.
France's reform attempts are a laughable drop in an ocean of red tape and tyrannical taxation.
Well...PayPal is ready to use....
I wanna be a drunken sailor. Well, drunk at least.
If I were a chic, I'd hang out with lots of drunnken sailors!
I guess I never thought of it from the chic perspective because, I'm, you know... a guy.
Well now you know.
Borrowing costs would have us believe that these are solvent, responsible governments - so why not run up the debt? If I could borrow at ridiculously low interest and never be obilgated to pay back the principal, I'd certainly be tempted to do so.
For that matter, even if they're not and their fate is already sealed, why not run it to the moon while you can? You could go bust over $1 or $100T, it's all the same on default day.
Very true. A Trillion here, a Trillion there, before you know it, it starts adding up to real money. (sort of).
"If I could borrow at ridiculously low interest and never be obilgated to pay back the principal, I'd certainly be tempted to do so."
IF it is not intended to be repaid then it is NOT debt: it is a perpetual income stream disguised as debt.
IT IS NOT DEBT.
IT IS THE IMPLEMENTATION OF A SOPHISTICATED FORM OF FEUDALISM.
THE FUTURE PRODUCTIVITY OF PEOPLE IS BEING SECURITIZED AND SOLD TO OLIGARCHS.
POLITICIANS ARE SELLING THE CITIZENRY TO PEOPLE WHO PRINT DEBT/MONEY OUT OF THIN AIR.
GOVERNMENT BONDS ARE THE TITLES TO SLAVES REFFERED TO AS TAXPAYERS.
If the bonds are defaulted on, then they represent a gift from people with excess money and excess faith in the system to the recipients of government programs funded by those bonds.
or "stealing" by saying ...here lend me some dough..i will pay you back when you need it.. but........ policies are designed to keep making the punched out hole in the silver coin bigger until.... it is a ring....then the hole is bigger than the coin and then...what debt?
This is indeed the case. It is odious in the extreme.
Yes. People learn slowly, if at all. The willingness to go along with the joke is a leftover from a bygone age when governments actually made the payments on their bonds. That won't be going on much longer. then, whammo, crash, ba-zam.
Here's a good laugh. Both of the aformentioned have 10 year yields lower than U.S. 10's.
Spain 10Y ( 2.338) 2.368 2.421 2.307 -0.030 -1.27% 16:49:52
Italy 10Y ( 2.453) 2.470 2.508 2.434 -0.017 -0.69% 16:47:31
Mispricing risk much?
Those who are suppressing the rates are just looking at a different risk than you are.
None of the traditional tools of fixed income valuation apply to those sovereign bonds. It isn't default risk (which is either 100% or 0% depending on your perspective), It isn't inflation or lack thereof. It isn't currency devaluation/appreciation. It sure as hell isn't expections of rising rates in the future. It isn't any of those things.
They're that low because they must be. And for no other reason, or the Euro project quickly blows up. Spain and Italy can not be bailed out. Therefore their interest rates are pushed low and will likely be pushed lower.
Very true; but as we all know this is a temporary "fix".
its asset price inflation. happens in treasury bonds cos even muppets won't buy Loans and High Yield that are below the long run ten year yield of c. 5%.
the fed desparately wants the asset price inflation to spill over into economic actvity that it models for past decades of failure and over leverage in the banking sector. ..all ends in tears whicever way you look at it..
"They're that low because they must be. And for no other reason, or the Euro project quickly blows up."
The Tower of Babel cannot be rebuilt? Whocouldanode...
Draggie is taking care of this....
Uh-huh.
Much. Yes. Human Stupidity in Action. Awesome.
Now think for a minute; what's it going to look like when the mass mind rolls over, and it's time to sell this shit? To who? Ha-Ha. that's going to be very amuzing.
Finally, an ACTUAL hockey stick chart on ZH that isn't the Fed's Treasury holdings.
The longer they refuse to implement voluntary austerity, the sooner they will have to implement involuntary austerity.
Fuck Government and the Leviathan it sailed in on!
Austerity doesn't work. The economy shrinks and tax receipts decline faster than the government can cut spending.
Meanwhile, Italy has a youth unemployment rate of 42.7%, and Spain's is 56.1%.
What now, ECB? IMF? *crickets*
labelling something "austerity" simply conceals the problem. too much spending and not enough tax.
you can call it austere to live within your means, others might call it "getting off the road to ruin" (that's what i call it).
Of course "Austerity" works. Had these governments been "austere" since the get-go they'd never become insolvent to begin with. There would be no tax base / revenue bubble in the first place.
Austerity will happen one way of another. The only difference is whether its controlled or chaotic. Pop.
austerity in France means wave it away by branding half your Govt debt as illegal
it's magic
Per capita fed gov't borrowing for the month of July:
Italy $22
Spain $129
US $252 *
When it's fiat, it's all relative. Still, incredible that Spanish 10yr yield is lower than US.
* number posted prior to edit was based on growth of total public debt outstanding, is figure is for growth of debt held by the public
You can still get pretty good yield on 10yr Greek bonds, 5.72% (+3.12 relative to U.S.).
Wow, thanks for the tip, I better get some of those right away, since Gold doesn't pay interest.
See ThroxxOfVron post. I'm just pointing out who is monetizing their slaves more quickly at the moment.
...as long as you don't care that the principal will never be repaid, yeah, it's a pretty good deal.
sacré bleu
This could be the classic Keynesian effect which is: cutting government spending in a recession is counterproductive as it just leads to more unused assets, further demand destruction, less economic activity, and in fact less revenue driving worsening deficits. The important graph to show would be effective tax rates and government spending, as deficit trends are mostly driven by underlying economic activity.
the Keynesian effect indeed, the whole economic disaster is the classic Keynesian effect.
Please, point in the graph where exactly do you see the "cutting government spending"
Keynes never called for increased government spending during a boom. Certainly not on top of an artificial boom based on increased government spending.
Every day at around 1PM, almost without fail, there is significant treasury weakness. What happens every day at 1PM? Reverse repos by the NY FED, a gift of Treasury collateral (banks get paid to get it!) that, based on the price action, clearly indicates that the banks use the treasury collateral to short treasuries.
So there you have it, our central banks with a gift and an incentive for banks to short treasuries of their own country. This is a f%cked up country.
hmmm...good spot..so when do they mostly get bought back? buy there sell before rev repo
"Austerity" , with a negative GDP ex drugs and prostitution, ;)
WINNING... bitchezzzzz.
Take a goot look at that chart, Germany, since your taxpayer money will have to fix it.
half the German States look like that chart
they've found a solution to out-of-control politicians ... tax the people more
the out-of-control politicians worked out that solution all by themselves
How about the United Kingdom. Their debt must be soaring still. Austerity has been threatened and tiny measures taken, but really, they have not touched the core of governmetn bloated spending. And that is "In many place in the UK, Government is the majority employer". Impossible you say? Nope, in many towns, most people go to a government job. Though the National Health Service does distort this figure to a degree, the rate of government employment is near communist levels.
true...national health is the country's largest employer at around 3% of the labor force. debt is beyond the pale and the deficit isn't going to turn into a surplus (desparately needed objective for all western governments to reverse the slide into poverty).
government workers net/net, spend all they own on their pension plans health plans and houses and living expenses...so its like money going round.
that is, if they were unemployed they would cost the same and there are sufficient increases in pay in the private sector to migrate the ones that are marketable.
just wait til you get robots in health care beyond the ones already doing precision surgery.
Austerity doesn't work these days because western countries are so fucked up with regulations that the economy will contract no matter what. In one of Peter Schiff's videos, he was saying that he had to let an employee go because the government no longer allowed her to work from home, but she had to stay home with her child. Big companies have people who do nothing but regulation compliance. Smaller companies will avoid the hassle by not hiring people. Trying to fire someone in France is fucking impossible. This is why American job applications are a 1-2 page resume and cover sheet whereas European applications are huge life stories. A European company won't hire you until they're absolutely certain you're not a cunt. Without all of the regulations, companies could take a chance and hire people based on a 1 page summary of their experience. If they suck, they're gone, and someone else is hired.
Spain's and Italy's bond markets were shut down in 2012. The BCE owns them and only they and their proxies buy bonds now. Rates are merely decorative. It's all a show.
Remind people, at this time of absurdity, that on default/hyperinflation, the assets on the ground will still be there; the roads, factories, buildings. They will simply have different owners than they have now.
Before the default/currency fission, and afterwards, the objective of every single politcian is to remain in charge both before, and after, the event.
Tic Toc. Tic Toc.