I have touched upon the issue of confidence in previous posts. When it comes to banking and finance, and particularly borrowing, confidence is very important. When it is gone, it is gone.
The trouble is that those in the high-finance world have such assets at their disposal that they can put real pressure on a currency or a sovereign nations debt. Knowing that it might simply be a matter of time until a restructuring, why wait? Why hope for profits in a year or two? Why not just move the timetable forward and make the money now?
Until confidence is restored – and the actions of government in some countries are not exactly inspiring (Portugal and Belgium for example) – it is not easy to see how euro nation debt problems can be fixed. As mentioned in this post ( UK Public Sector Spending Cuts: What Is The Alternative? ) despite what looks like responsible decisions being taken by the Coalition, they may not be going far enough.
One is forced to wonder when the option of expelling a state from the euro will start to be discussed seriously. Of course, that is a very serious matter, and if it were seriously discussed, the timetable of the vulture hedge funds would move up, making the reality even more likely.
This is a viscious cycle down which, for now at least, seems to have no bottom.financialguy