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| 1Q2018: "Eurzone Undersiege"; Breaking: Italy to suspend payment of ECB bonds. | |
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| Tweet Topic Started: May 30 2018, 01:24 AM (166 Views) | |
| Cloud Strife | May 30 2018, 01:24 AM Post #1 |
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Longshanks II
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Italian economic unrest triggers major crisis Moves by the European Central Bank (ECB) to reduce bond buying initiatives has triggered a domino effect in Southern Europe. The policy shift came as the Bundesbank and other Northern European regulators have demanded a slow down in the purchase of Italian government bonds. Last week the self-imposed 1/3rd of Italian issued gilts limit for ECB purchases was reached. In the midst of political deadlock as the Italian President Sergio Mattarella and the populist Lega Nord and Five-Star Movement squabble over government formation, the current caretaker ministry lacks the votes reauthorize a new bond issue at market sustainable rates. In reaction, the new trading day has seen the FTSE MIB fall by over 2,000 points in three hours before trading at the Borsa Italiana was halted for the duration of the week. Across Europe, North America, and Asia, markets have continued on a downward march as speculation rises that instability in Italy will result in a collapse of the Eurozone; a monetary union of 19 of the 28 European Union (EU) member states which have adopted the euro as their common currency and sole legal tender. The Italian contagion is becoming especially virulent in Cyprus, where the decision of the government to close the accounts of Russian nationals subject to Russian sanctions--most notably Viktor Vekselberg, who owns over 10% of the Bank of Cyprus--has already thrown that island nation's economy into chaos. Meanwhile, in China, Japan, and South Korea, all eyes are on the Euro as it slips closer and closer to parity with the US Dollar. The effect of a weakened Euro will see private savings, especially in China, hurt as a result of the political decision to diversify away from the US Dollar. All eyes now turn to the ECB if they can salvage the situation from moving further out of control. --- And Out of Character (OOC) note on major events: These are events that are global in scope. This first major one has to deal with the economy and depending on how players approach this event, the overall global picture can change. You are welcome to post initial responses here in this thread but also feel free to use your own nation-specific domestic affairs threads for posts. |
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The Republic of China | |
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| Cloud Strife | Jun 8 2018, 02:58 PM Post #2 |
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Longshanks II
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--Update-- As Europe debates, the Euro continues to tumble. As of mid-July it has reached parity with the US Dollar and the markets have begun to cry out for ECB action. To that end the ECB has resumed buying Italian government gilts to to sooth Southern European investors and selling Italian debt to a consortium of North American and East Asian institutional investors. The "band-aid" is not expected to last long; President Trump's on-going conflict with the US Congress has created new levels of uncertainty the market is unable to price in. Additionally, the ECB has ruled out any form of debt forgiveness or modifying payment schedules on existing bonds for lack of authority granted to it. |
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The Republic of China | |
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| Cloud Strife | Jun 12 2018, 04:11 AM Post #3 |
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Longshanks II
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--Update-- A shock announcement by the United Kingdom in regards to US President Trump's economic policy has proven too much for structural controls to bear. A proposal to weaponize debt in protest against an American policy to match tariffs has sent all global markets into a tailspin. Trading in New York City had to be halted due to a "glitch" but upon resuming today the DOW has lost 2,800 points, the British FTSE in London has halted trading for balance of this week and the pattern continues to hold across the world. Analysts blame this chain reaction effect on a blanket unwillingness by World Leaders to discuss economic issues. While the Trump Administration's aggressive protectionist policy is drawing support for the Republicans in Fall election battlegrounds, the overall economic health of the United States has begun to suffer. Furthermore reciprocal tariffs in response to President Trump increasing American rates beyond WTO permitted levels threaten to undermine "Trumpcare's" revenue model. Should the United States continue to act unilaterally--especially in regards to the Trump Administration's trade policies--there is a high probability Congress will claw-back Executive discretion over trade and subject new tariffs to Senate confirmation, as well as a rumored Cabinet revolt that would effectively grind Mr. Trump's ability to move policy via Executive Order to a halt. Meanwhile, Europe and East Asia are seeing their pension investment funds dry up as the market is unable to price such levels of uncertainty into general estimates. Solutions for the Italian economic crisis and a response to America's trade war against the globe will be necessary in the coming days. --- [OOC: All players should start talking about how pouring gasoline on a dumpster fire is a bad idea. Events are reactive to player actions and so far I have seen no player try to directly engage the actions of the United States, in-game, on trade. I would highly recommend bilateral or multilateral talks as ignoring player actions probably isn't going to solve this to anyone's satisfaction.] |
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The Republic of China | |
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| Cloud Strife | Jun 13 2018, 08:50 PM Post #4 |
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Longshanks II
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--Update-- News of advanced talks between Italy and the United States have calmed investor fears somewhat. A rallying market this week have recovered 2/3rds of last weeks losses throughout global markets. Meanwhile, all eyes now turn to the United Kingdom if it can resume a responsible economic path in the coming days. |
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The Republic of China | |
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| Cloud Strife | Jun 28 2018, 03:48 AM Post #5 |
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Longshanks II
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--Update-- The failure of Brexit has calmed global markets, with investors jumping at any sign of good news. As Q3 ends markets are up worldwide. |
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The Republic of China | |
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3:43 AM Jul 11