Sovereign debt bubble thread

[Iormlund]

New jobless figures are out. Up to almost 23%. There are over 1.5 million families without a single employed member. Oh yeah!

[Jacob]

23% ... that's crazy.

[MadImmortalMan]

Fitch downgraded Belgium, Spain, Cyprus and Italy today.

[Sheilbh]

23% ... that's crazy.

Greek youth unemployment's over 50% now.  I can't comprehend it.

[Valmy]

23% ... that's crazy.

Back in the 80s the Spanish unemployment would be around 35%.  I never understood it but Larch and company explained to me at one point that there is a large sector of unofficial employment.

[MadImmortalMan]

Unofficial employment? Is that like the tax-evasion sector?



In any case, I think I'd be headed to the colonies too. Go West, young man.

[Iormlund]

Yes, it means working outside the system. It's not as bad as in Greece, but it's definitely there. Otherwise there would have been riots at Andalucia or the Canary Islands already.

In any case we'll break 25% soon. And IIRC that doesn't even include those undergoing retraining or those who have given up ...

23% ... that's crazy.

Greek youth unemployment's over 50% now.  I can't comprehend it.

What's there to comprehend?

My entire generation is heavily indebted and will be for the next 30 years. Our parents are on the hook if we fail to meet payments. Add the chances of losing your job (very high for <40 year olds) and it's no wonder people won't spend in this climate of uncertainty.
Meanwhile low-class families and the <25 generation bear the brunt of unemployment and can't spend either.
The rich are probably busy moving their shit to Germany, Switzerland and the like.

Businesses are deep in debt as well. Confidence nowhere to be seen. Credit completely frozen. And so is hiring, obviously.

[Sheilbh]

What's there to comprehend?

I just can't imagine a Euro-society with 50% youth unemployment.  As Jacob said, it's just crazy.

[Iormlund]

It's only logical. In a two-tiered employment environment young workers are always the first to go when there's trouble. They are pretty much cost-free to fire.

[The Brain]

I wouldn't hire a young Greek or Spaniard.

[Iormlund]

What about a not-so-young one?

[The Brain]

What about a not-so-young one?

No problem. I just hate young people.

[The Minsky Moment]

Please explain to me how a country with unlimited central bank money creation power can ever be caught in a deflationary spiral.

A conventional central bank can only influence money supply through issuance of base money.  But ultimately the money supply is determined by private actors - lending banks and financiers.  The banks can make an expansion of base money ineffective by (for example) using the money to build reserves, depositing it with the central bank, or simultaneously shedding their asset (loan) base.  This actually happened in 09.

A non-conventional central bank, like the present day Fed, can counteract this in part by non-fiscally neutral interventions or directly supporting asset prices through asset purchases.

[MadImmortalMan]

Bad day for Portugal. Ten-year yield hit the roof.

[Admiral Yi]

The graph makes it look like Armaggedon but the yields only rose a point and change.

Very misleading graph.

(Which is not to say that Portugal looks ossum.)