Originally posted by fullyautomatix
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My reasoning is this. When market liquidity dried up, we printed money. We are now no longer allowed to print any more, Mastricht says so. So we have stopped, and the most fragile economies are starting to squeak first (PIIGS) as the liquidity dries up again. Hence the trillion $ bailout from the IMF just to try and kick the can a little further down the road. But that is all it is. At some time the piper must be paid.
There are lies, damned lies and statistics as Disraeli told us. Well none so more than in the financial markets. It is possible to hide public debt. Greece managed it for example, but their private debt is less easy to hide for the reasons I mentioned earlier.
So if you take into account the increased Libor, reduced liquidity, fear of contagion, much awaited economic policy, the markets are waiting to see which way they go. I think the eurozone is teetering on the brink of collapse and the most vulnerable will go first. For a measure of the most vulnerable, look at PRIVATE debt to GDP ratio.
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