The € EURO thread

[Toro]

Here are a couple of clips with Sean Egan from CNBC yesterday. Egan is the founder of the ratings firm Egan-Jones, which is generally considered far less conflicted than Standard & Poor's or Moody's, given that Egan-Jones charges those who use their service as opposed to other ratings agencies that charge the companies they are rating.

Repeat of the Credit Crisis? - CNBC
Markets' Sharp Price Decline - CNBC

 

[Trajan]

Here are a couple of clips with Sean Egan from CNBC yesterday. Egan is the founder of the ratings firm Egan-Jones, which is generally considered far less conflicted than Standard & Poor's or Moody's, given that Egan-Jones charges those who use their service as opposed to other ratings agencies that charge the companies they are rating.

Repeat of the Credit Crisis? - CNBC
Markets' Sharp Price Decline - CNBC

thx for that.

scary, very scary. and, I think we know that if he estimates a 20 billion gap, thats what he thinks he knows, the banks know what he doesn't so I will add another 30% fudge factor.

5 bill. to cover ireland portugal greece....italy(?) The Euro bank is fracked.


toro lets skip ahead, how long before the dilution hits our pocket books by proxy?


edit- to tired to get into it now but, here, tarp 2 is on the event horizon, BofA is fracked too.....

 

[Trajan]

well, Der Fuhrer has spoken-

The recent resolutions transfer sizeable additional risks to the countries providing assistance and their taxpayers, and go a long way towards communitising risks caused by unsound public finances and misguided macroeconomic policies in individual euro-area countries. This weakens the foundations of monetary union, which is based on the principles of national fiscal responsibility and the disciplining effect of capital markets, without noticeably increasing the influence and control over individual national fiscal policies as a quid pro quo.

Overall, there is a risk that the originally agreed institutional framework of the monetary union will increasingly become eroded. While fiscal policy will continue to be determined by democratically elected parliaments at national level, the resultant risks and burdens will increasingly be borne by the Community in general and the financially sound countries in particular, without this being offset by any concrete powers to intervene in the sovereignty of national fiscal policies. No comprehensive change in the European treaties is currently envisaged that would democratically empower a central entity to exert some control over national budgetary policies. This means there is a danger that the euro-area countries’ propensity to incur debt may increase even further, and the euro area’s single monetary policy will be increasingly susceptible to the temptation to adopt an accommodating stance. Unless and until a fundamental change of regime occurs involving an extensive surrender of national fiscal sovereignty, it is imperative that the no bail-out rule that is still enshrined in the treaties and the associated disciplining function of the capital markets be strengthened, and not fatally weakened.

from-
BundesBank Policy outline

http://www.bundesbank.de/download/volkswirtschaft/mba/2011/201108mb_en_overview.pdf


the smack, has been laid down.

 

[Toro]

The IASB says that banks have not marked down their Greek debt enough. If so, they probably haven't marked down their other sovereign debt as well.

Some European financial institutions should have taken bigger losses on their Greek government bond holdings in recent results announcements, according to the body that sets their accounting rules.

In a letter sent to the European Securities and Markets Authority, the European Union’s market regulator, the International Accounting Standards Board criticised the inconsistent way in which banks and insurers have been writing down the value of their Greek sovereign debt.

“This is a matter of great concern to us,” Hans Hoogervorst, IASB chairman, said in the letter, which was published on Tuesday after the IASB’s concerns were revealed by the Financial Times.

People familiar with the IASB’s thinking said the intervention was unprecedented and reflected its belief that some European companies had not been making enough provisions for Greek sovereign debt losses.

Financial institutions have slashed billions of euros from the value of their Greek government bond holdings following the country’s second bail-out. The extent to which Greek sovereign debt losses were acknowledged has varied, with some banks and insurers writing down their holdings by a half and others by only a fifth.

The letter did not single out particular countries or banks. But according to one person familiar with the correspondence, it reflected concern at the approach taken by BNP Paribas and CNP Assurances.

The French bank and insurer both announced 21 per cent writedowns, as envisaged by last month’s Greek bail-out. They argued there were no reliable market prices to guide a “fair value” for Greek government debt because of their illiquidity and instead used a “mark to model” valuation. Banks and insurers that used market prices suffered a bigger hit. Royal Bank of Scotland wiped £733m from the value of a £1.45bn Greek government bond portfolio – a 51 per cent cut.

Mr Hoogervorst challenged the justification for a “mark to model” approach and also the valuations these produced. “Although the level of trading activity in Greek government bonds has decreased, transactions are still taking place,” he said. “It is hard to imagine that there are buyers willing to buy those bonds at the prices indicated ... it is therefore difficult to justify that those models would meet the objective of a fair-value measurement.”

IASB criticises Greek debt writedowns - FT.com

 

[editec]

Today was about Italy.

In some ways, it's fairly odd, given that Italy doesn't have a big deficit and has been reducing it's deficit over time. It didn't have a big bubble and it's banks aren't distressed, or at least not more so than other European banks. However, it was the third slowest growing economy in the world over the past decade, with only Zimbabwe and another country worse. It has negative productivity and a lot if debt.

It's NOT odd.

Look at the Celtic tiger.

They did everything right. Their national economic plan could have been written by the most conservative economic NEO-conservatives.

And STILL their economy tanked.

At some point in time we're going to have to acknowledge to ourselves that having people working is ALSO part of the formula for having a healthy economy.

Don't know when we're going to do that, though, as the mavens that control the Western economies surely don't give a fuck about their people.

 

[KissMy]

here are a couple of clips with sean egan from cnbc yesterday. Egan is the founder of the ratings firm egan-jones, which is generally considered far less conflicted than standard & poor's or moody's, given that egan-jones charges those who use their service as opposed to other ratings agencies that charge the companies they are rating.

repeat of the credit crisis? - cnbc
markets' sharp price decline - cnbc

$6 trillion shocker!

 

[Zander]

The problem with Europe.....

Pythagorean theorem: 24 words
Lord's prayer: 66 words
Archimedes' Principle: 67 words
Ten Commandments: 179 words
Gettysburg address: 286 words
US Declaration of Independence: 1,300 words
US Constitution with all 27 Amendments: 7,818 words
EU regulations on the sale of cabbage: 26,911 words

On a serious note, Wednesday is the German Constitutional Court decision. If they rule against the euro, all hell will break loose. And they could, although I expect a more moderate outcome......Surely they realize the entire future of the Euro is riding on their ruling?

 

[Trajan]

The problem with Europe.....

Pythagorean theorem: 24 words
Lord's prayer: 66 words
Archimedes' Principle: 67 words
Ten Commandments: 179 words
Gettysburg address: 286 words
US Declaration of Independence: 1,300 words
US Constitution with all 27 Amendments: 7,818 words
EU regulations on the sale of cabbage: 26,911 words

On a serious note, Wednesday is the German Constitutional Court decision. If they rule against the euro, all hell will break loose. And they could, although I expect a more moderate outcome......Surely they realize the entire future of the Euro is riding on their ruling?

and ahead of that, merkel is sinking fast, her party got pounded, if they the court plays games and punt, shes even in worse of a pickle because it will be up to her, and the public aint down with it. IF they rule the bailout illegal, oh boy. long term good short term, very very bad.

 

[Baruch Menachem]

Given the electoral pounding the German government has been receiving no matter which way the court rules, she may face no confidence votes out of her own party.

If the court punts, there will be a new election and the SDU will win it.

 

[Trajan]

and it appears they will not go along with the bailout. this was sooner or later going to happen, you can hide the facts from the rubes for only so long.

 

[Trajan]

looks like the German courts decision has had little effect in that the their will have to be a major move by the g-7 before Monday's European open. how much firepower and influence do the central banks have left, seriously?

 

[Toro]

It's like a never-ending B movie.

But a bank or three have to go under before the German public will move.

 

[Baruch Menachem]

we have gone beyond too big to fail to too big to rescue.

In boy scouts we had lifesaving class. First lesson is don't get too close to the person you are trying to rescue. They will drown you before going under themselves. You toss them ropes, and if they are cool enough, they will grab them. YOu toss them flotation devices, and the will grab them. But under no circumstances do you get where they can destroy you.

If they don't grab the rope, if they don't grab the ring, all you can do is fish the body out afterwards. The Greeks and the Italians have had multiple chances to fix the problem. They have tried to pull Germany and France in with them.

The best decision right now is just to wash their hands and let it all sort out the hard way. Recognize the previous spending was a sunk cost and invest no more into this rat hole.

 

[Toro]

French Banks Poised for Moody

 

[Trajan]

we have gone beyond too big to fail to too big to rescue.

In boy scouts we had lifesaving class. First lesson is don't get too close to the person you are trying to rescue. They will drown you before going under themselves. You toss them ropes, and if they are cool enough, they will grab them. YOu toss them flotation devices, and the will grab them. But under no circumstances do you get where they can destroy you.

If they don't grab the rope, if they don't grab the ring, all you can do is fish the body out afterwards. The Greeks and the Italians have had multiple chances to fix the problem. They have tried to pull Germany and France in with them.

The best decision right now is just to wash their hands and let it all sort out the hard way. Recognize the previous spending was a sunk cost and invest no more into this rat hole.

we have gone beyond too big to fail to too big to rescue.

exactly.....


and;

The head of the IMF has warned that its $384bn (£248bn) war chest designed as an emergency bail-out fund is inadequate to deliver the scale of the support required by troubled states.

In a document distributed to the IMF steering committee at the weekend, Ms Lagarde said: "The fund's credibility, and hence effectiveness, rests on its perceived capacity to cope with worst-casescenarios. Our lending capacity of almost $400bn looks comfortable today, but pales in comparison with the potential financing needs of vulnerable countries and crisis bystanders."

The suggestion came after European officials revealed they were working on a radical plan to boost their own bail-out fund, the European Financial Stability Facility (EFSF), from €440bn (£384bn) to around €3 trillion.

The plan to increase the EFSF firepower is the crucial part of a three-pronged strategy being designed by German and French authorities to stop the eurozone's debt crisis spiralling out of control. It also includes a large-scale recapitalisation of European banks and a plan for an "orderly" Greek default.

more at-

Christine Lagarde: IMF may need billions in extra funding - Telegraph



an orderly default?


and...
almost $400bn looks comfortable today, but pales in comparison

you bet it does. they are just reinforcing failure.

 

[Toro]

A better line is "We've gone from 'Too big to fail'" to "Too big to bail."

 

[editec]

Before we start kneeling to Germany and blaming the mediteranians, lets us remember that Germany was in trouble (and needed the EU's help) when it undertook to absorb East Germany, shall we?

Shit happens, folks.

 

[Toro]

Before we start kneeling to Germany and blaming the mediteranians, lets us remember that Germany was in trouble (and needed the EU's help) when it undertook to absorb East Germany, shall we?

Shit happens, folks.

Really? How?

 

[Baruch Menachem]

That was a smart decision at the time, very dumb in retrospect. They wanted to get the ossies as close to western values as quickly as possible, but marking up the ostmark at .5 dmarks was way too high.

I was not aware that the Greeks and the Italians and Spaniards helped out the Germans at the time. I thought they financed that entirely internally.


According to Wiki, there is no way for the eurozone to sanction a state that fails to follow the rules once it is in, and Greece seems to have lied their way in, and now can't be removed.

Right now it looks like the Forint and Zloty are the healthiest currencies in europe. Given history, that is very funny.

 

[Trajan]

well, let it be said, there is never a shortage of suckers, ever and they exist in every nation. The German people are screwed.

and whats funny is, the standards they have to come down from means they will feel the screwing before the heaps they are volunteering to rescue.

lets remember what this is for and driven by one thing at its crux; a lets all get along pile of Unicorn poppey.

I don't care how many pseudo or not academic/intellectual's ( who will shortly be divorcing themselves as usual from their wreckage) came out of the woodwork to prophecy the grand bargain of Pan- Europeanism expressed thru one set of voices and one currency come out of the wood work, Germans are Germans Brits are Brits and Greeks and Italians are Greeks and Italians.

They started breaking the rules set forth ala fiscal and financial strictures as laid down in the Maastricht treaty almost from the very start, in fact much of what they are doing now runs contrary to their charter. But like all such social engineering, they can never ever take a step back nor admit failure.

So they will pursue this right into the abyss. instead of letting Greece ( which they will anyway in Nov.) default and just let them out from the Euro and see how that works as a test case, they shut their eyes and just send in the D Marks oops, Deutsch Euros like the Grenadier Guard in a futile attmept to change the inevitable.

They will take the collection of the 400 or billion and use it as collateral for some form of other financial vehicles that will yield trillions, leveraging their finances forward for decades ....and they will once again "La Garde a Feu" this time for Italy or Spain or? .......*shrugs*...and so it is and so it shall be, they won't stop till they run out of bodies.