Global Macro Trading Journal

Quote from jj90:

What's the nuke point for Italy? 8, 9 ,10%? It's been mentioned before somewhere on ET but I can't find it currently...
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What do you mean by nuke?I think they are doing the right thing by not borrowing at these rates. The EU will come to the rescue I suspect through the 20% guarantees but it could be something else
 
Quote from Martinghoul:

Beats me... I think it's taking the thesis that EUR might go anywhere when/if the bad guys, including Italy, exit the EMU.
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It seems to me that high PPP currencies went from being safe havens to risk assets
 
Europe solved again. Another great fade opportunity coming in the EUR. Only question is whether to do it before the close today. Might get a euphoric Sunday night bounce if Italy forms a new Vichy gov't by then. On the other hand, EUR will open sharply lower if Italy backtracks.
 
Random anecdotal fact: I was offered a apartment buying 'opportunity' in Sao Paulo the other day while in a bar with my brother having some beer. The woman said I could get an teaser loan with a low interest rate and refinance in a few years after the price rose. The apartment price was quite expensive
 
Some say the PIGS need to devalue so they can become attractive again...

But today you can earn the same working part time in a supermarket in Wester Europe then you can make working 50 hours a week in Italy as a college graduate...

How much wider does that gap needs to get for them to reclaim productivity again...


Also Today I read the statistic that according to the Dutch German chamber of commerce in 2010 75% of German exports went to other European countries, +60% of German exports go to other EU zone members.

Those poor Germans. Ranting about those lazy Italians and Greeks when perhaps they actually owe their employment to them...


It's a interesting phenomenon.

I used to work weekends as a student in a place that relied largely on the spending of unemployed and uneducated yet the boss back then did nothing but complain about how you could get everything for free in this country if you just didnt work.
 
Quote from Debaser82:

But today you can earn the same working part time in a supermarket in Wester Europe then you can make working 50 hours a week in Italy as a college graduate...

How much wider does that gap needs to get for them to reclaim productivity again...
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After tax net income does not equal unit labor costs. Unit labor costs are the ratio of total labor costs divided by real quantum of output.

The Germans managed to drop their unit labor costs by some 10% over the last 10 years while the PIGS ran then up 10-20%. I am sure they have taken some steps in the right direction and are in the 2nd inning of becoming more competitive but there's still a long way to go. Unfortunately for the PIGS they were dumb enough to sign themselves to the slavery chains of the EUR zone. The Peseta, Lira and Drachma would take care of the competitiveness problem. Just like the Pound does for the Brits.

Krugman - like him or not - wrote a piece recently comparing the UK and Italy's challenges with productivity in light of one tied to the EUR it can't print and one having a flexible exchange rate:

'Britain has achieved a 15 percent relative deflation via depreciation; it would take incredibly painful deflation for Italy to achieve the same.'

http://krugman.blogs.nytimes.com/2011/10/05/italy-and-the-uk/
 
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