China to the rescue?
Why buy a theme park like Disneyland? Or an automotive classic like Ferrari?
Why invest in football teams like the Russian Oligarchs? – Forget it, the must-have hot purchase right now for seemingly the only country on the planet experiencing actually fiscal growth as opposed to shrinkage, China, is that sexy status symbol everyone needs to have – European debt! Ooh, that does have a ring to it, doesn’t it?
Not really, but besides buying up Europe’s dwindling stock of Chateau Lafite Rothschild 1981 and single malts that cost as much as the single currency is worth, the Chinese have promised Italy’s Finance Minister, Giulio Tremont, that ‘don’t fear, we’re here to buy your sovereign debt, and invest!’ That sounds like music to Europe’s ears, but is it a reality or just hot air, and will it just buy Italy a bit more time?
Many analysts fear that this is just dinner table chatter and nothing more. In a recent Guardian article, head of fixed income research at Evolution Securities, Gary Jenkins, pointedly shot down this China-as-savior notion, “If it really came to pass then it would provide an immediate confidence boost. I just won’t hold my breath.” Citing that the European community has heard this before concerning its sovereign debt, but ultimately it has been the ECB that has taken up the cause (and now losing a key minister due to this practice). Another key analyst suggested that the “internal political wrangling” would have to stop in countries like Italy and America, in order to see a return of market confidence – a lofty notion, but one that might ultimately prove more fruitful for those ailing eurozone nations, rather than just selling off the state to Beijing.