Eurozone will collapse...

It will make you feel a whole lot worse, trust me. And if it seems as if our system magics money out of thin air ... That's because it does.

---------- Post added at 18:47 ---------- Previous post was at 17:28 ----------

Originally Posted by chris9991

Google video has it here -
http://video.google.com/videoplay?do...56453790090544

Certainly opened my eyes when I saw it a few years ago

Right - just watched it, and it's not the one I saw before, but it is in the same series. It looks like that's the original. The one I saw, and which I just found again, is "money as debt 2 - promises unleashed". It is on YouTube in its entirety here:

http://www.google.co.uk/url?sa=t&sou...yU77nHnvt87yHg

[Chrysalis]

Originally Posted by DaiNasty

Every western economy seems to be borrowing money hand over fist. But where does that money come from?

Can anyone point me to a simple explanation of this system as it seems to me as a financial innocent that there must be a magic money tree somewhere.

They not actually borrowing, the term is misleading.

Usually they sell bonds to countries like china. Or it could be as simple as printing money.

[Ignitionnet]

What do you think interest bearing bonds are if they aren't borrowing? They're a promise to pay back a certain amount of money that has been provided in advance after a period of time with interest payable in the interim. Sounds like borrowing to me?

Printing money isn't 'usual' either, we've done it with our quantitative easing programme but this is not 'usual', it's very unusual due to its effects.

[Dai]

So apparently the banks 'create' money on the books from nowhere. Their gain comes from the interest due on this imaginary money.

If that's the case surely it could be un-created just as easily, leaving just an agreed and hopefully much-reduced interest fee payable as settlement.

[Ignitionnet]

Originally Posted by DaiNasty

So apparently the banks 'create' money on the books from nowhere. Their gain comes from the interest due on this imaginary money.

If that's the case surely it could be un-created just as easily, leaving just an agreed and hopefully much-reduced interest fee payable as settlement.

Sadly not, they insure this money against default, and they use the money stream from the lending of this money in securities.

http://en.wikipedia.org/wiki/Securitization

Once this stuff is created it's quite real and can't be made to disappear unless someone is prepared to purchase the securities / bonds and tear them up.

[chris9991]

Hooray! It's all sorted

http://www.bbc.co.uk/news/world-europe-15472547

[Osem]

Yes how typical of the EU leaders to be so decisive when it really matters..

What planet are these guys on? If they spent less time time patting eachother on the back and more time facing up to the tough realities of economic life we'd all be a lot better off. I've long considered the economy to be a house of cards and right now that's looking rather generous.

[nomadking]

They said banks holding Greek debt accepted a 50% loss, the eurozone bailout fund will be boosted and banks will have to raise more capital.

They don't really have to do anything for 2 out of 3 things. It is the investors(including pension funds?) who will suffer.

[Anonymouse]

Someone once said "If builders built buildings the way programmers write programs, then the first woodpecker that came along would destroy civilisation." Perhaps he should have said "economists" and "economy".

http://www.bbc.co.uk/news/business-15533940

Greece will hold a referendum on the conditions of its bail out.

Pesky Greeks, upsetting the EU apple cart with their ancient democracy. Honestly, you'd think they invented it ...

[Ignitionnet]

I guess having 10% of their population protesting on the streets day after day finally gave them the hint that while there are a lot of issues at home the people don't deserve to pay for them with such savage austerity and a flat economy to protect other nations.

I have a little sympathy for banks though, many were required to invest in Greek debt.

Italy seem to be in bad shape at the moment, before long Silvio may have to stop trying to score with teenagers and actually take some action - what's happening puts in sharp focus how dependent on the EU backstopping their economy Italy have been.

ROME -(Dow Jones)- Italy's Unicredit SpA (UCG.MI) led declines on the Milan bourse, with the bank's shares down as much as 6.8% in early trading Tuesday.

All of the shares on the blue-chip FTSE-Mib index were down and the index was down 3.1% on a day when Italy's sovereign debt woes increased after the Greek government announced a referendum on its austerity plans.

Inteas Sanpaolo SpA (ISP.MI) shares fell 6.8%, while other financial sector companies suffered similar drops.

Banca Monte dei Paschi di Siena SpA (BMPS.MI) fell 4.9%, while Fiat SpA (F.MI) led declines in the industrial sector as its shares fell 5.3%.

Yields on Italy's 10-year government bonds hit a euro-era high in terms of their differential over equivalent German bunds. The gap was 422 basis points, or 4.22 percentage points, before share trading began. It later rose to 434 basis points.

[Sirius]

Originally Posted by chris9991

Hooray! It's all sorted

http://www.bbc.co.uk/news/world-europe-15472547

Not if the Greeks have anything to do with it

[Dai]

Originally Posted by heero_yuy

Don't think the markets like the nuclear option.

and if what Traduk says is correct, nuclear would be the right word. If a raft of credit default swaps are triggered it could be the start of a doomsday scenario.

[chris9991]

I guess the sooner the crash happens the sooner the rebuilding can happen; rather than helping those who made bad investment decisions

[Sirius]

Originally Posted by chris9991

I guess the sooner the crash happens the sooner the rebuilding can happen; rather than helping those who made bad investment decisions