Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Chinese Tech Stocks CCP Paranoia and Best AI Tech Stocks ETF - 26th Oct 21
Food Prices & Farm Inputs Getting Hard to Stomach - 26th Oct 21
Has Zillow’s Collapse Signaled A Warning For The Capital Markets? - 26th Oct 21
Dave Antrobus Welcomes Caribou to Award-Winning Group Inc & Co - 26th Oct 21
Stock Market New Intermediate uptrend - 26th Oct 21
Investing in Crypto Currencies With Both Eyes WIDE OPEN! - 25th Oct 21
Is Bitcoin a Better Inflation Hedge Than Gold? - 25th Oct 21
S&P 500 Stirs the Gold Pot - 25th Oct 21
Stock Market Against Bond Market Odds - 25th Oct 21
Inflation Consequences for the Stock Market, FED Balance Sheet - 24th Oct 21
To Be or Not to Be: How the Evergrande Crisis Can Affect Gold Price - 24th Oct 21
During a Market Mania, "no prudent professional is perceived to add value" - 24th Oct 21
Stock Market S&P500 Rallies Above $4400 – May Attempt To Advance To $4750~$4800 - 24th Oct 21
Inflation and the Crazy Crypto Markets - 23rd Oct 21
Easy PC Upgrades with Motherboard Combos - Overclockers UK Unboxing - MB, Memory and Ryzen 5600x CPU - 23rd Oct 21
Gold Mining Stocks Q3 2021 - 23rd Oct 21
Gold calmly continues cobbling its Handle, Miners lay in wait - 23rd Oct 21
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

EURO Set to Soar Over Next 5 Years, Reason 10 year Debt Schedule of Europe

Currencies / Euro Jul 06, 2011 - 12:38 PM GMT

By: Submissions

Currencies

Diamond Rated - Best Financial Markets Analysis ArticleMany are going to receive this with skepticism. EURO is set to soar esp against the US dollar and UK pound.

As per the EU stat released debt maturity schedule of PIIGS, a total of 370 bn euros was paid in 2010 while 328 is set to be paid in 2011. What is important to understand though is that the amount due to be retired decreases to 96.5 bn euros in 2016.


If EU can implement a debt schedule where each of the countries stick to the respective debt limits and learn from their previous mistakes, we do believe that the EU will be a powerful financial union irrespective of whether a political union exists or not. It is for the world to see that EU has till now restructured nearly 80 bn of last years 380 bn of debt maturing without any default. Yes they fought and arm twisted but ultimately they fell in line.

After the latest restructuring the debt schedule for each of the PIIGS countries is attached.

Greece leads the pack with nearly 120 bn due over the next 4 years. But if Greece can pay back this amount, Greece is well positioned to get their economy back on track. It is an “IF” but it cannot get worse than this. The amount that defines the Greece race to economic freedom is the 120 bn euros which is roughly 10-15% of Greece GDP.

Italian have been comfortable compared to Greece. Nearly 251 bn euros due in 2010 was paid back on the back powerful auctions all through 2010.

The amount due decreases each subsequent year and hence provides tremendous comfort to the ECB. Italy is not in the league of Greece. The due amount never increases beyond 20% of the GDP (~1.6 trillion euros).

Ireland debt schedule differs from the rest in that debt maturity is back ended and hence the problems for Ireland has only begun. 38 bn euros are due in the next 4 years while 50 bn euros are due in the 4 years subsequent to 2015. But given that the rest of the pack would have already emerged out of the debt trap by then, Irish debt maturity can be a manageable matter.

What should give comfort to investors though is that payout never goes beyond the countries GDP by 12% which is a comfortable debt service ratio to manage.

Portugal matured 17bn euros in 2010 and 15 bn in 2011 which is a decreasing amount for the next 5 years.

Portugal does not have a debt problem in our view. The overall debt maturing in the next 70 bn euros over the next 4 years which on an annual basis is not greater than 10% the countries GDP.

Total PIIGS debt maturity schedule is as follows

The total maturing debt (10 year) is roughly 370 bn and 328 bn respectively for 2010 and 2011. These are puny compared to EU GDP of nearly $14 trillion. The Debt Service ratio for EU is in the comfortable range which what gives comfort to EURO investors (esp China).

Given these debt schedules, the EU deficit is comfortable at 6.9% of GDP.

The 10 year yield has sprung for Greece and Spain but should not be a problem given that ECB is in the market to control. Even if the ECB has to step outside its mandate to purchase all PIIGS debt in 2011/12, the balance sheet hit should not be more than 600 bn euros compared to a USD 2.3 trillion for the US. And that is the worst case esp given that Italian and Spanish yields are currently comfortably placed led by strong auctions.

Given the persuasive tactics of the ECB, we believe the ECB should be able to put the house in order over the next 12 months by which point we expect the US debt maturity schedule to throw strong challenges pressurizing the dollar.

Happy investing and always keep track of the Macro story.

Source : http://gmbpost.com/investment-news/...

by Jenson

http://gmbpost.com

Bio: Worked with a hedge fund for 10 years as a Director and now work with the consulting firm "GMB post"

© 2011 Copyright Jenson - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in