last Friday afternoon, I heard a commentator on a public radio station saying that a differential of 2.5 percentage points on English debt the German "scary." I was afraid to hear, and most of the comments that followed, including not only politicians and experts, but a European commissioner and someone from the employers' confederation, among others.
should distinguish the following about the debt. First, it is appropriate to compare with the German debt, because their rates are artificially low, considering a very liquid market and a refuge, it would be fairer comparison with a country like Italy. A year ago the ten-year bond was in Germany to 3.40% and 4% in English, German debt today this term is 2.4% and 5.4% English. The increase is due to the double differential effect indicated that while the other goes low. In addition, increases in absolute terms they are still reduced because we are historically low rates, and the ups and downs just adjusting in less than one percentage point. I would not buy German and U.S. debt, I think there's a bubble in them, because interest rates 2.65% and 2.80%, respectively, for ten years, did not respond to any fundamental criterion in these countries. Rates between 5% and 6% are the most reasonable in Europe.
Second, Germany is the great beneficiary of the euro, allowing you to expand its industrial production in an area protected from the vagaries of the coins. If you continue to enjoy their situation has to bear the consequences of the debt of countries in the area the euro, issued largely to finance the growth and absorption of immigrants in the area. Third, Germany has more debt than Spain, but less private, business and banks borrow to produce and invest, or speculative activities as have been the acquisition of other companies, now have to pay the consequences of inadequate investment and further forward. Fourth, the public and private debt are now closely linked, in Ireland the State wished to come to the rescue of the banks exceeded the national economy, and the attack on the public debt is an attack on banks and firms, especially in the bags. The meeting with English Prime Minister large companies seeking a common strategy makes sense, since they are listed who suffer the vicissitudes of the market.
Fifth, when it comes to reassure the markets know that these are naturally neurotic, bullish or bearish, with moments hysterical. Volatility is what gives good benefits, not calm. After Asia and Europe will then North America (not sure if that order). Markets have the power to limit excesses and correct errors require public and private, but if there is no strong responses from governments and central banks will impose the kind of dictatorship where everyone is suspicious of something, and in which, by reciprocity, also considered suspect in the markets. Gumersindo
should distinguish the following about the debt. First, it is appropriate to compare with the German debt, because their rates are artificially low, considering a very liquid market and a refuge, it would be fairer comparison with a country like Italy. A year ago the ten-year bond was in Germany to 3.40% and 4% in English, German debt today this term is 2.4% and 5.4% English. The increase is due to the double differential effect indicated that while the other goes low. In addition, increases in absolute terms they are still reduced because we are historically low rates, and the ups and downs just adjusting in less than one percentage point. I would not buy German and U.S. debt, I think there's a bubble in them, because interest rates 2.65% and 2.80%, respectively, for ten years, did not respond to any fundamental criterion in these countries. Rates between 5% and 6% are the most reasonable in Europe.
Second, Germany is the great beneficiary of the euro, allowing you to expand its industrial production in an area protected from the vagaries of the coins. If you continue to enjoy their situation has to bear the consequences of the debt of countries in the area the euro, issued largely to finance the growth and absorption of immigrants in the area. Third, Germany has more debt than Spain, but less private, business and banks borrow to produce and invest, or speculative activities as have been the acquisition of other companies, now have to pay the consequences of inadequate investment and further forward. Fourth, the public and private debt are now closely linked, in Ireland the State wished to come to the rescue of the banks exceeded the national economy, and the attack on the public debt is an attack on banks and firms, especially in the bags. The meeting with English Prime Minister large companies seeking a common strategy makes sense, since they are listed who suffer the vicissitudes of the market.
Fifth, when it comes to reassure the markets know that these are naturally neurotic, bullish or bearish, with moments hysterical. Volatility is what gives good benefits, not calm. After Asia and Europe will then North America (not sure if that order). Markets have the power to limit excesses and correct errors require public and private, but if there is no strong responses from governments and central banks will impose the kind of dictatorship where everyone is suspicious of something, and in which, by reciprocity, also considered suspect in the markets. Gumersindo
Ruiz.
(Grupo Joly 11/30/2010)
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