Barclays Says Italy Is Finished: "Mathematically Beyond Point Of No Return"
Submitted by Tyler Durden on 11/08/2011 20:13 -0500
Euphoria may have returned briefly courtesy of yet another promise for a resignation that will likely not be effectuated for weeks or months, if at all, and already someone has done the math on what the events in the past several days reveal for Italy. That someone is Barcalys, the math is not pretty, and the conclusion is that "Italy is now mathematically beyond point of no return."
Summary from Barclays Capital inst sales:
1) At this point, it seems Italy is now mathematically beyond point of no return
2) While reforms are necessary, in and of itself not be enough to prevent crisis
3) Reason? Simple math--growth and austerity not enough to offset cost of debt
4) On our ests, yields above 5.5% is inflection point where game is over
5) The danger:high rates reinforce stability concerns, leading to higher rates
6) and deeper conviction of a self sustaining credit event and eventual default
7) We think decisions at eurozone summit is step forward but EFSF not adequate
8) Time has run out--policy reforms not sufficient to break neg mkt dynamics
9) Investors do not have the patience to wait for austerity, growth to work
10) And rate of change in negatives not enuff to offset slow drip of positives
11) Conclusion: We think ECB needs to step up to the plate, print and buy bonds
12) At the moment ECB remains unwilling to be lender last resort on scale needed
13) But frankly will have hand forced by market given massive systemic risk
Hint:Not Good.Sell EUR, Buy Gold
The broader referenced report can be found here.
And the assocaited powerpoint is below:
I a blue collar worked very hard for almost 50 years, with small savings,just retired recently, this what Barclays said is terrifying to me. Bernanke said a few days ago that US has the tool to insulate herself from Europe crisis. Any thought anybody? thanks in advance.
I am not surprised, but I think this is so huge it is unbelievable. This actually confirms (if you believe the story, which I do) that there will be a European economic contagion collapse.
The U.S.'s debt situation is also "mathematically past the point of no return".
How can anyone envision a world economic outlook that is more dire than what we are looking at right now?
The economic house of cards has already been built with devastating amounts of debt...devastating.
This house of cards cannot be "unbuilt". Collapse is the only inevitable outcome.