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Spotlight Ideas Managing Partner Stephen Pope explains why European investors have reason to be nervous about the European markets.
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In countries in crisis a rush to -- exit for leaders of Greece and Italy.
But without a plan the situation could spin out of control investors don't like that idea Stephen Pope managing director.
-- managing partner spotlighting India's joins me now from London Stephen there doesn't seem to be a plan for Greece or or Italy at this point how nervous.
Our European investors.
I think you can see that by the passage of Italian yields policy 7% mark becoming extremely none of us.
We don't seem to making too much clear -- reversing informant a new national unity government in Greece political through -- the much -- concern which is Italy.
That even if they help policy for 2011 budget -- -- few -- -- and mr.
Berlusconi steps aside.
Is anybody who comes in can be -- -- came to navigate their way to put the austerity program into place without causing -- -- -- French banks French banks in particular Stephen they are sitting on 305.
Billion.
Your o.s are French banks when it comes at a time in debt -- French banks the ones that could fall.
It Italy false.
Yes you take anybody this non Italian and certainly the French banks -- all the largest international group.
In terms of their exposure to both public and so about the state debt.
What I think you're going to find is that they because they've chased expansion into mostly on the growth idea of -- giving -- the Euro era.
A national beginning to come back to so hold them they are going to be struggling they may be able to absorb the Greek debt -- been telling us total sum up.
But quite frankly they are in a serious shape and you've seen the reaction with the share prices in today's trading.
This is Stephen it's Gregg Jarrett and can the Euro -- even afford to bail out.
Italy after bailing out Greece Portugal in Italy.
Up our sport I'd like -- is me.
No because they cannot do you take C -- European Financial Stability Facility.
That has they sum total 440 billion.
And the list they find it convincing way to leverage -- chemicals and -- the Chinese assignment or very much institution or no -- -- didn't -- -- do that.
So what you're finding is that size of that fund compared to one point nine trillion euros of -- -- that this outstanding.
There's just impossible something will not to be achievable this time around that is why I think -- all very much.
Aging towards the end of the Euro era as we know it because it's just unaffordable unsustainable.
And something has to give.
Without somebody there likely you just said.
And I just said that before you came on I'm Dan -- nice to meet you but I wanna ask you said something very important here.
Which a lot of people don't realize is that if this doesn't work.
Civil unrest which were actually seeing some of the earlier signs early signs of it now.
What do you think it really happen if the population of these countries really start to get angry and the austerity doesn't work what -- civil unrest can you foresee.
Well I think you have a situation where by.
If few -- persuade Chinese don't put some money in and they did so -- On the basis that they can't get cheap deals to buy -- truth -- that a privatized.
Three or four years down the line and suddenly energy prices water prices go through the roof from refined that was actually foreigners are leading Italian -- utilities.
There's going to be -- almighty -- and you're gonna have a situation.
Well one.
Nations will say haven't got the money won't -- the money.
Secondly people on the street was thought causing such an amount of distress from -- that you could literally see your go through some -- Dislocation.
And that the Morton democracy met market economies that we've seen would be seriously at risk.
That's for those states that have been told some cells on state expenditure -- way beyond any tenable limit.
At least -- say in my country UK.
The new coalition government -- amounts have -- that try to cut back the debt.
Knowing that it's just unsustainable.
And untenable to -- public deficits of that magnitude.
-- well I mean look if you if you look at and the its kind at one point nine trillion that is more than the combined debts.
Of -- -- Portugal.
Of Ireland.
This is a scary situation Stephen Pope managing partner spotlighting -- Stephen thank you.
