The € EURO thread

[Zander]

I predict Euro/Dollar parity within the next 12-24 months. Invest accordingly....

 

[Trajan]

hummmmmmm....


It Just Went From Bad To Far, Far Worse As Germany Says Italy Is Too Big For EFSF To Save, Refuses To Carry Euro Bailout Burden

Dow Jones just hitting the tape referencing Spiegel
SPIEGEL ONLINE - Nachrichten


* German Govt: Italy Too Big For EFSF To Save - Spiegel
* German Govt: Doubts Whether Tripling EFSF Would Help It Save Italy
* German Govt: Italy Must Make Savings, Reforms To Exit Crisis - Spiegel
* Italy Debt Guarantee Could Raise Doubts Over Germany's Finances - Spiegel
* German Govt: EFSF Should Only Help Small, Mid-Size Countries - Spiegel

As a reminder, yesterday's stopgap announcement by the ECB to expand its SMP purchases of secondary market Italian and Spanish bonds was merely as a precursor to full EFSF monetization until its comes fully online in September (or sooner) in a vastly expanded format (between €1.5 and €3.5 trillion).

If Germany is now against this, which appears to be the case, it pretty much means, well, game over.

Add the uncerainty over the unwind of the Europe rescue "gamechanger" as one of the more naive CNBC anchors said yesterday, and Monday is now guaranteed to be a bloodbath.

As for those saying China will gladly step in and fund a $5 trillion EFSF shortfall, they may want to read the following article from Reuters:

Italian Economy Minister Giulio Tremonti said on Thursday that Asian investors are reluctant to buy Italian bonds because it sees they are not being bought by the European Central Bank.



Speaking at a news conference, Tremonti also said it would be desirable for the central bank to follow the lead of the Japanese and Swiss central banks in taking expansionary steps to tackly the euro zone's crisis.



"I note that the Bank of Japan today launched quantitative easing and the Swiss cen bank cut rates to zero, we are waiting for decisions if possible, but desirable (from the ECB)," Tremonti said.

more at;
http://www.zerohedge.com/news/it-ju...too-big-efsf-save-refuses-carry-euro-bailout-

 

[Trajan]

I predict Euro/Dollar parity within the next 12-24 months. Invest accordingly....

you were right, we are still the tallest midgets at the circus...O U rep

 

[Baruch Menachem]

Maybe someday Soon the Euro zone will split into a north euro zone (Poland, Czeck Republic, Hungary, Slovakia, Germany, Denmark, etc.) and a south euro zone, which will just go broke.

Germany and France badly want the Euro to survive, but they don't feel like being patsies for the Greeks and the spaniards.

 

[Zander]

I predict Euro/Dollar parity within the next 12-24 months. Invest accordingly....

you were right, we are still the tallest midgets at the circus...O U rep

An argument could be made that by agreeing to join the EU, the individual nations were giving up part their Sovereignty. Greece is a perfect example of this- they can't inflate away their problems. They have no national currency. They must use the Euro. They are screwed!

 

[Trajan]

Maybe someday Soon the Euro zone will split into a north euro zone (Poland, Czeck Republic, Hungary, Slovakia, Germany, Denmark, etc.) and a south euro zone, which will just go broke.

Germany and France badly want the Euro to survive, but they don't feel like being patsies for the Greeks and the spaniards.

the euro was always a political tool, they told themselves it would add heft to the entire grp. it appears to me; that the entire euro franchise and whats become of the referendums , treaties etc. precludes popular participation. the 'people' are not quite ready to become one worlders, not is it really feasible unless you totally and absolutely break down every border and brain wipe nationality from the body.

 

[Trajan]

so it appears italys uni-credit and several BIG Europe banks will need recapitalization, the 'people' are now fully awake, the plan to prop the south, I figure, its over. they are outta bullets too.

 

[Trajan]

I have a question- what is the exposure of US money market funds to the euro? or that is its positions is positions they have taken in European banks etc etc ?

 

[Toro]

I have a question- what is the exposure of US money market funds to the euro? or that is its positions is positions they have taken in European banks etc etc ?

It's been taken through the banks. They've been dialing it down, though.

 

[Trajan]

I have a question- what is the exposure of US money market funds to the euro? or that is its positions is positions they have taken in European banks etc etc ?

It's been taken through the banks. They've been dialing it down, though.

meaning; we have been paying for their failed positions....wonderful.

 

[Trajan]

On another note;

the German GDP just took a major hit, revisions have them stalled at .1%

Oh and I am sure they are going to lower the rates they just raised 6 months agao .50% too..... ( Frances gdp will of course crater too)

You know, these folks fon't live in the real world ....please pardon my 'french'; just let the fucking euro go....you are going to anyway, stop prolonging the agony and the inevitable, wrecking the system further....jesus Christ for supposedly intelligent people, stupidity seems to reign supreme.

Sluggish German GDP derails European stock rebound

PARIS, Aug 16 (Reuters) - European stocks fell on Tuesday, halting a rebound that started last week, as investors fretted about tepid German GDP growth ahead of talks between German and French leaders on the euro zone debt crisis.

At 0811 GMT, the FTSEurofirst 300 index of top European shares was down 1.5 percent at 954.55 points.

Data showed German GDP growth slowed more than expected in the second quarter, dropping to 0.1 percent in seasonally adjusted terms from a revised 1.3 percent in the first three months of the year.

"This is a serious disappointment," West LB economist Joerg Lueschow said. "Many growth forecasts will now likely be lowered and we will do so too. This does not provide any positive signs for euro zone GDP. We cannot expect more than stagnation now."

With French data last week signalling a stagnated economy in the second quarter, the weak German figures suggested the 0.3 percent forecast for euro zone growth, due at 0900 GMT, could turn out to be too optimistic.

more at-
Sluggish German GDP derails European stock rebound | Reuters

 

[Trajan]

I have a question- what is the exposure of US money market funds to the euro? or that is its positions is positions they have taken in European banks etc etc ?

It's been taken through the banks. They've been dialing it down, though.

in related news...



Fed Eyes European Banks
Regulators Scrutinize Ability of Institutions' U.S. Units to Fund Themselves

Federal and state regulators, signaling their growing worry that Europe's debt crisis could spill into the U.S. banking system, are intensifying their scrutiny of the U.S. arms of Europe's biggest banks, according to people familiar with the matter.

The Federal Reserve Bank of New York, which oversees the U.S. operations of many large European banks, recently has been holding extensive meetings with the lenders to gauge their vulnerability to escalating financial pressures. The Fed is demanding more information from the banks about whether they have reliable access to the funds needed to operate on a day-to-day basis in the U.S. and, in some cases, pushing the banks to overhaul their U.S. structures, the people familiar with the matter say.

Officials at the New York Fed "are very concerned" about European banks facing funding difficulties in the U.S., said a senior executive at a major European bank who has participated in the talks.

Regulators are seeking to avoid a repeat of the 2008 financial crisis, when the global financial system began to seize up. This time the worry is that the euro-zone debt crisis could eventually hinder the ability of European banks to fund loans and meet other financial obligations in the U.S. While signs of stress are bubbling up, the problems aren't yet approaching the severity of past crises.

more at-

Fed Eyes Cash Europe Banks Have in U.S. - WSJ.com

 

[PeteEU]

so it appears italys uni-credit and several BIG Europe banks will need recapitalization, the 'people' are now fully awake, the plan to prop the south, I figure, its over. they are outta bullets too.

False rumour promoted by an anti Europe British tabloid that use to support the Nazies. The newspaper retracted the article and apologized. Investigations are ongoing about where the rumour came from since it was a clear market manipulation attempt.

 

[Trajan]

so it appears italys uni-credit and several BIG Europe banks will need recapitalization, the 'people' are now fully awake, the plan to prop the south, I figure, its over. they are outta bullets too.

False rumour promoted by an anti Europe British tabloid that use to support the Nazies. The newspaper retracted the article and apologized. Investigations are ongoing about where the rumour came from since it was a clear market manipulation attempt.

I wasn't aware of that, can you link to that please?

 

[PeteEU]

so it appears italys uni-credit and several BIG Europe banks will need recapitalization, the 'people' are now fully awake, the plan to prop the south, I figure, its over. they are outta bullets too.

False rumour promoted by an anti Europe British tabloid that use to support the Nazies. The newspaper retracted the article and apologized. Investigations are ongoing about where the rumour came from since it was a clear market manipulation attempt.

I wasn't aware of that, can you link to that please?

cant post links yet hehe... but google "mail sunday soc gen" and you will get a few links. It was widely reported on the financial news channels (Bloomberg and CNBC) last week.

 

[Colin]

so it appears italys uni-credit and several BIG Europe banks will need recapitalization, the 'people' are now fully awake, the plan to prop the south, I figure, its over. they are outta bullets too.

False rumour promoted by an anti Europe British tabloid that use to support the Nazies. The newspaper retracted the article and apologized. Investigations are ongoing about where the rumour came from since it was a clear market manipulation attempt.

A false rumour applying to one French bank. There are a number of European banks that are in danger of defaulting.

Eight out of 90 European banks have failed stress tests designed to ensure they can withstand another financial crisis.
The European Banking Authority (EBA), which carried out the healthcheck, said another 16 banks were in the danger zone.
The EBA called on national financial regulators to ensure that capital shortfalls would be quickly resolved.
Five Spanish banks failed, as well as one in Austria and two in Greece.
On Wednesday, Germany's Helaba pulled out of the stress tests, effectively making it the ninth bank to fail.

BBC News - Eight banks fail EU stress test with 16 in danger zone

 

[PeteEU]

A false rumour applying to one French bank. There are a number of European banks that are in danger of defaulting.

Eight out of 90 European banks have failed stress tests designed to ensure they can withstand another financial crisis.
The European Banking Authority (EBA), which carried out the healthcheck, said another 16 banks were in the danger zone.
The EBA called on national financial regulators to ensure that capital shortfalls would be quickly resolved.
Five Spanish banks failed, as well as one in Austria and two in Greece.
On Wednesday, Germany's Helaba pulled out of the stress tests, effectively making it the ninth bank to fail.

Was a French bank and an Italian. Was also an utter baseless lie by the Mail on Sunday and I hope they sue the shit out of the newspaper group for slander and liable.

As for the European stress tests... they have to be taken with a grain of salt so to say.

First off you have to look at the banks who failed the tests. All the Spanish banks were Caja's, and were already known suspects. Caja's are local saving banks and there are far far too many of them. There has been a consolodiation of these banks going on for the last 5 years. They are very small banks in the grand scale of things and frankly I have never understood why they were included considering their size. They account for around 3% or so of the Spanish banking market last I looked. And on top of that other local banks around Europe were not included... err okay. There are far more than 90 banks in Europe

Secondly, you have to factor in the American banks and other international banks as well. The last time there was a stress test of American banks was several years ago and we already know now that those stress tests were not exactly impartial. For one Bank of America was and until very recently (if not still) pretty much insolvent. But BOA managed to dump 76 billion worth of toxic sub-prime mortgage backed securities on Fannie and Freddie and suddenly the problem with BOA is less.. but the US federal debt just grew with 76 billion. Funny how no one on the other side of the pond or in Europe dared talk about the problems BOA was in for years, but all of a sudden it is all the European banks that are a problem and being talked down including banks like very profitable and secure banks like HSBC and Barclays and Banco Santander. No one talks about American banks for some reason.... denial?

So this attack on European banks is mostly baseless and more than likely is a way to direct attention away from the real problem,... the US banking sector.

You do realize that over 139 banks have so far failed this year in the US right? It is 389 banks since the crisis started in 2007.

I say irrational driven panic based on constant talking down of economies and companies and rumours instead of facts. We are in a very evil cycle at the moment where people are talking down markets and causing the sell offs and panic pure based on rumour and "talking heads" being negative on pretty much everything.... negativity breeds negativity..

Average people in the US and Europe will stop spending because they hear daily how bad things are, which will only make things even worse and actually for-fill the dire negative comments of the pundits and experts, which in turn will lead to even more negative comments which will make people panic even more and make the economies even worse and worse. We need to break this cycle and re-establish a rational market again or else we will end in that depression certain pundits have been fearing since 2007... pundits I bet who have a lot of money invested in CDSs and are in line for a huge payout if countries and companies start falling like flies...

 

[Toro]

The stress tests were a joke.

Several big European banks are very undercapitalized and at risk. SocGen is one of them. So is Commerzbank. In fact, the German banks are in worse shape than the French banks. If this thing spreads to Germany, look out. The politicians are looking at Tier 1 capital and saying the banks are well capitalized. That's a joke. These banks have large off balance sheet liabilities. If you bring those liabilities back onto the balance sheet and mark them to market, the European banks are very weak.

The US banking system is not the problem. The US banking system raised hundreds of billions of dollars in capital and have written down nearly a trillion dollars in assets since the Financial Crisis began. The European banks never raised capital and have been playing "kick the can down the road" during the whole crisis. They are still marking their sovereign debt at par. They are keeping loans on their books way above their actual value. And they refuse to do anything about it. Europe is the problem, not America.

 

[PeteEU]

The stress tests were a joke.

Several big European banks are very undercapitalized and at risk. SocGen is one of them. So is Commerzbank. In fact, the German banks are in worse shape than the French banks. If this thing spreads to Germany, look out. The politicians are looking at Tier 1 capital and saying the banks are well capitalized. That's a joke. These banks have large off balance sheet liabilities. If you bring those liabilities back onto the balance sheet and mark them to market, the European banks are very weak.

Off balance sheet liabilities.. like what?

Fact is regardless how pessimistic you are, the European banks have the backing of government. Say Commerzbank is an issue, but guess what... then it will be sold off to another bank or nationalised. It aint a major problem as you think it is. Much of this "panic" is based on false talking points, hype and rumour.

For example, earlier this week the talking heads on financial news started talking about the "supposed fear" that inter-banking lending could be a problem because of the "European debt crisis".. and guess what? As of last night it suddenly became a problem which it was not before these moronic talking heads started floating the idea. Even the freaking Swiss banks are in trouble.

The US banking system is not the problem. The US banking system raised hundreds of billions of dollars in capital and have written down nearly a trillion dollars in assets since the Financial Crisis began.

Yes it is.. just because the US banks had and have the ability to off load their shitty loans to government backed companies does not mean that the banking system is healthy. BOA just offloaded 76 billion in sub-prime crap to Fannie Mae. Guess who now has to deal with that bad debt? And if the US banks have "dealt" with their crappy loans, then why all of a sudden did BOA have to make a deal with Fannie Mae for 76 billion in loans? Was this not suppose to be dealt with years ago?

Also where did you get the 1 trillion number? The numbers I have seen on write downs of US sub-prime crap dont tally up to anywhere near 1 trillion. And ironically many of those write downs were done by European banks.... But it would be great if you could provide a link as I am very interested in where you got the number

The European banks never raised capital and have been playing "kick the can down the road" during the whole crisis.

Not true. Our capital requirements according to the regulations have been met and are in many banks far higher than the requirements. Where there was need for capital, the banks did raise capital. You see in Europe we have banking regulations, and regulators that actually work. Some countries like Spain have quite harsh no-nonsense regulators which has meant that Europe is not burdened with the same "sub-prime" bad loans as the US was.... with the exception of Ireland of course.

Are there some banks that may be in trouble? Of course but as an over all banking system, the European is pretty okay as it stands now and has been through this whole crisis.

They are still marking their sovereign debt at par. They are keeping loans on their books way above their actual value. And they refuse to do anything about it.

Again not true. Most banks have been writing down Greek debt, Irish debt and other debt over the last few years. In fact Soc Gen rumours started when they said they were writing down their Greek debt load yet again. Google it... still cant post links.. 5 more posts to go..

Europe is the problem, not America.

It is a problem on both sides of the Atlantic. Only issue is one side is in total denial of their own financial system and think they dodged a bullet 3 years ago via TARP and so on. If you had not noticed, your housing problem has gotten worse and aint going away any time soon.

What is need is to stop blaming others while ignoring your own problems. I dont deny that Europeans need to fix their structural problems and sadly due to elections coming up in both Spain, Italy, France and Germany, that these changes wont happen any time soon. But like it or not, Europeans are use to "hard times" and never have been major spenders as it was. But as long as the US is in a political nightmare of the part of NO vs a wussy President then the problem will remain with the US since the US like it or not, is the engine of the world economy... Europe aint.. we just sell to the rest of the world. So the whole world is waiting for the US to fix its shit.

 

[Toro]

It's more than just rumours and fear mongering. The Fed opened up swap lines to the ECB way back in May and began instructing money market funds to cut bank on European bank paper last month. Eurodollar swap spreads widened out as did Eurolibor-OIS.

European banks are not well capitalized. They have not marked down their books far enough. Commerzbank wrote Greek bonds to zero but SocGen marked them down 20%. The Spanish banks in no way have marked their books to reflect the fall in housing prices in Spain.

America is not in great shape but it is better than in Europe. Loan loss provisions to delinquent loans are about half that in Europe as they are in America. The government force fed American banks capital-raises through TARP. Even though European banks have built capital through net interest margin, they have resisted issuing large amounts of shares as US banks did.

As I said, Europeans are saying that the banks are well capitalized. They are not. There was no correlation beween Tier 1 capital and solvency when the American banking system was insolvent a few years ago. Citigroup had Tier 1 capital of 8% just before it was bailed out.

Adjusting for off balance sheet liabilities and marking assets to market, equity capital is much lower than the accounts suggest. And though I fully expect the European governments to backstop any failures, don't be surprised if big European banks implode over the 24 months and get bailed out by their respective governments.