Finito?

[Az]

I'd imagine that was due entirely to Spanish banks borrowing three-year money from the ECB at ultra-low rates and then lending it out to the Spanish gov't.

Well, yes, of course, but this means that near and medium-term insolvency worries are relieved. The Spanish government also seems to take the idea of structural changes rather seriously, so.... if the alleviate the damages done by over-investment in sectors fueled by pre-2008 events, they will be ok. Spain's industrial sector was not substantially directly harmed by neither 2008 nor 2011, AFAIK.

This will not be short or easy, of course.

[pchang]

As a private investor, I don't care about how countries got into the state that they are in. I care about the yield I can get vs. the risk I won't get paid back. At the moment, I would only trust Germany and the UK to pay me back. In fact, I trust the future dividend stream of companies like CTL more than I trust Germany and the UK.

[Dauphin]

You trust PH and me to pay our taxes?

[dannubis]

belgium has a new government as of this month.

Yes. Without a majority in the largest state in the country. Democracy at work.

Oh well, I am already scheduled to pay 450 EUR additional taxes next year, just for my company car.

[pchang]

You trust PH and me to pay our taxes?

No. I trust Inland Revenue to force you and PH to pay your taxes. That said, there is a possibility your government might spend itself into insolvency.

[C0ckney]

Well, yes, of course, but this means that near and medium-term insolvency worries are relieved. The Spanish government also seems to take the idea of structural changes rather seriously, so.... if the alleviate the damages done by over-investment in sectors fueled by pre-2008 events, they will be ok. Spain's industrial sector was not substantially directly harmed by neither 2008 nor 2011, AFAIK.

This will not be short or easy, of course.

as dan says the fall was due to the ECB's LTRO. spain still faces a lot of problems, the unemployment situation is horrible, the economy faces a difficult challenge to rebalance itself away from an over reliance on construction and there is a feeling that there is more bad news to come from the housing market and banks.

when it comes to LTRO itself, the size of it (483 billion euros) illustrates rather well the dire straights that european banks are in at the moment. it's another temporary sticking plaster solution which does nothing to address the underlying problems. in the immediate term, markets have reacted positively to it, but i think that once they really start to consider the size of the operation and what it says about the scale of the problem, sentiment will deteriorate.

i notice as well that the ECB has once again relaxed its collateral rules, at this rate i'll be able to tap up the ECB for a loan before long! what we're left with is a very good deal for the banks (who can access cheap credit with loose collateral requirements) and, potentially, a very bad deal for taxpayers, who will be left holding the can if things go wrong.

[C0ckney]

No. I trust Inland Revenue to force you and PH to pay your taxes. That said, there is a possibility your government might spend itself into insolvency.

i wonder how long it will be before the UK's situation deteriorates. they have the highest debt to GDP in the world, if you take into account all debt...

[Dauphin]

I thought that was Japan?

[Provost Harrison]

Last time I checked our debt (in terms of the state) was not so alarming - about the same as Germany.

[Dauphin]

All debt includes government, corporate and private debt. Which is pushing 500% of GDP in the UK and Japan. It's a bit skewed though, because the UK is a financial centre which gives it unique properties.

[C0ckney]

I thought that was Japan?

i think it depends on what you count as debt, but yes the UK and japan are pretty close.

[DanS]

All debt includes government, corporate and private debt. Which is pushing 500% of GDP in the UK and Japan. It's a bit skewed though, because the UK is a financial centre which gives it unique properties.

Are you looking at a chart? If so, please do share.

[C0ckney]

http://www.gfmag.com/tools/global-database/economic-data/10403-total-debt-to-gdp.html#axzz1hGi4AWBr

would be one, although the figures are a couple of years old.

[Dauphin]

Are you looking at a chart? If so, please do share.

McKinsey Debt and Deleveraging:

http://www.mckinsey.com/Insights/MGI/Research/Financial_Markets/Debt_and_deleveraging_The_global_credit_bubble_Update

Exhibit 1 (and to an extent 16) in the full report. You may find the appendix charts of interest.

[Dauphin]

Also, there is updated research at the bottom of the page.