Their debt is so massive even if they sold all their Gold they'd only pay off like 1-2 months of interest.
At current prices the Gold Italy has won't cover their debts. If Gold goes to $20,000+, it will. http://maxkeiser.com/2011/11/09/max-keiser-china-to-beat-imf-to-italys-gold/#comments
If Italy goes, the eurozone may go with it. And if that happens, there will be untold consequences for the world. GAME OVER
11. November 2011 1:28:16 EUROZONE: William Hill, a UK bookmaker, make Italy 7/2 second favourites to become the first country to leave the Eurozone as their financial concerns mount. Greece are the 1/ 4 favourites with Portugal at 10/1 and Spain 12/1. 'It is beginning to look very likely that the Eurozone could soon begin to break up' said Hill's spokesman Graham Sharpe. William Hill also offer odds of 7/2 that one or more countries will have quit the Euro before the end of 2012 (1/6 that none will), and are 7/4 that Greece will have reverted to the drachma by the end of 2012.
not to mention that euro politicians are doing everything they can to make sovereign cds worthless...
I would love to hear your reasoning of why a revaluation of gold (outside of the market doing it as a consequence of money printing) would cause immediate hyper inflation?
looks like Spanish bonds are on the move now! 1 month ago they were about 3.5% and now 5.3% for the 2 year. http://www.bloomberg.com/quote/GSPG2YR:IND/chart
Sorry, haven't checked this thread for a while. If we go back to gold standard, gold will be very expensive 50k+ per oz. Now, that will either invoke confiscation or other commodities will follow suit in their re evaluation vs fiat. If all basic commodities revalue vs fiat, effectively we have everything rising in price sharply, the super high inflation or hyperinflation. At the end of the day, if gold is 50k+ bread will be very expensive to obtain anyway. That is my personal take.
Why do you think all other commodities would revalue with it? If normal market forces revalue Gold and silver to those prices then it is a fair argument to make as it is high/hyper inflation that has caused it in the first place and your take makes a lot of sense to me. But, what if a government was to reissue a currency at considerably high conversion rates like Germany did a few years after WW2? And with that conversion it locked in the price of silver and gold with it say at 1000 gold and 80 silver and inflation of the money supply could only happen in exchange for the PMs at those rates? Would it not drive down the prices of other commodities even with the currency conversion taken into consideration? While PMs would be a fixed prices relative to paper all other commodities would be floating against it. Surely this mental yard stick of valuing everything against gold has to drive the value relationship of all other commodities down relative to it?
This is the beginning of the end not only for Italy, but for the entire western welfare state model ... -- Italian bond yields have just hit the point of no return. As you can see from the chart below yields on 10-year Italian bonds closed at 7.25 per cent overnight, after hitting a high of 7.48 per cent. -- For an economy with a government debt-to-GDP ratio of 120 per cent and no economic growth in sight, this is a fearsome borrowing cost. Even worse, Italy could well be slipping into recession. Recessions hit government revenues and increase their expenses. In other words, that ratio is set to get worse as GDP contracts and debt grows. -- Which is why Italian bond investors are bailing. Italy has the third largest government bond market in the world (behind the US and Japan) at 1.9 trillion. Around 300 billion is due for refinancing in the next year. And if the country does go into recession, it will need to access even more funds to keep its bloated welfare state afloat. -- At these rates of interest, it won't be able to do it. But Italy's too big to bail. Greece, Portugal, Ireland are all sideshows compared to Italy. The European debt crisis is now moving into uncharted waters. -- This is the slow death of the Western welfare state. It's not about the individuals. It doesn't matter whether it's Papandreou in Greece or the lunatic Berlusconi in Italy running the show. Their replacements will have no more idea about what to do to 'fix' things. This is about a corrupt and bankrupt system. -- It's a system of socialism masquerading as capitalism. Where the supposed king capitalists - the bankers - are the worst kind of socialists. They expect others to bail them out when things go wrong. And their screwed up philosophy is supported by a coterie of advisers (economists) who have been brainwashed at government-funded universities. -- For decades, European governments have been run by a bunch of crooks. To retain their hold on power they have promised their people cradle-to-the-grave care. These promises have been paid for by borrowing money...money created by central banks and commercial banks via the 'magic' of fractional reserve banking. -- But now the game is up. The politicians, being greedy and stupid creatures, got in too deep without understanding the limitations of the debt-based system they were rigging to their benefit. While the focus is squarely on Europe, it's only a matter of time before this reality hits Japan and the US. -- There are a few things to think about here. -- Firstly, money is money until it's not. What does that mean? -- Well, government bonds have for decades been considered risk free. Putting your 'money' in government bonds has been socially and financially acceptable. The market has therefore considered government bonds as good as money for years. -- Even though they are vastly different things, the market place's perception is that government bonds were 'money like'. -- No longer. Greek, Portuguese, Irish and now Italian government bonds are not considered to have anything like the qualities of 'money'. They are high risk. -- The implications of this are huge because as the crisis moves into the centre - Spain is next, followed by France, Germany and eventually the US and Japan - government debt all over the world will have lost its risk-free status. -- Trillions of dollars of assets (a government's debt is, unfortunately, someone else's asset) will no longer be perceived to have money-like qualities. When this perception takes hold, hundreds of billions of dollars of value will disappear. -- This is what has just happened to the Italian bond market. That 1.9 trillion pile of debt just lost its perception of being safe and money-like. Now it's worth a lot less in the accounts of the banks and pension funds that own it. That's why global markets, led by the financials, tanked overnight. -- The key take out here is that such a change in perceptions (which is really the market waking up to itself and catching up with reality) is hugely deflationary. -- This is why the European Central Bank (ECB) is under so much pressure to buy up unlimited quantities of Italian debt. But will they? Can they? -- The ECB already holds hundreds of billions of euros of peripheral nations' debt. It's pretty much insolvent itself. But central banks play by their own rules so that shouldn't stop it acting as a going concern. -- But the ECB is hampered by its flawed and bureaucratic structure from making quick and forceful decisions. In addition, its belief system is German - that is, driven by a fear of hyperinflation. Large-scale debt monetisation will not come easy. -- The pressure on the ECB to 'do something' will be huge. If it prints, Germany will object and likely leave the Eurozone (they have an inflationary get-out clause). If they don't the peripheral nations will be forced to leave. -- Either way, the Eurozone as we know it is dead. It was inevitable. But you can thank political incompetence for speeding up the process. -- How it all plays out from here depends on the ECB. If this thing escalates in the next few days, expect another weekend conference and Sunday night announcement about plans to 'contain' the crisis. -- Whatever they come up with (again) will be useless. The Day of Reckoning for Europe's post-WWII socialist experiment just arrived. The judgment isn't looking too good. -- The perception of money is changing very quickly. Italian debt just lost it. The debt of other countries will follow in its path. Soon, the only asset left with its perception of money intact will be gold. And by then it will be worth a lot more. -- Make sure a portion of your wealth is stored in the yellow metal. Greg Canavan, for The Daily Reckoning Australia
IF I lived in Italy, I would take any euros that I had in savings, go and buy gold or silver, and sit back and watch the show. They havn't got their own currency so they can't print their way out of the mess that their in. I think that the USA wouldn't mind going back to a gold standard for the US$ because if it creates hyper inflation well that makes it easy to pay off their $15 trillion in debt. This might make it miserable for the poor but will it affect the rich who have converted their fiat into gold?, I don't think so. $20 for a loaf of bread, no problems. The poor will be too small to save. Regards Errol 43
anywho in the mean time my grandma is still collecting the Italian pension after living in Australia for the past 50+ years. She is cleaning up getting both the Australian and Italian pension. shes going to be pissed when Italy stops sending money.
Kyle Bass is a hedge fund founder who saw the financial crisis coming and made a fortune from it - first from America's sub-prime mortgage crisis and then from betting that Greece would default. Mr Bass told Sarah Montague that Germany cannot be expected to bail out the PIIGS countries - Portugal, Ireland, Italy, Greece and Spain, and that only a massive write-down in those countries' debts will solve the crisis. http://news.bbc.co.uk/2/hi/programmes/hardtalk/9639507.stm
