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On That Accelerating Irish Bank Run...
Some may recall how the very contentious topic of Greek deposit bank runs was arguably the key catalyst to push Greece (and its banks) to accept a bailout from Europe, after the country realized it had little cash left (and the associated SNAFU in which RBS proved it really has no clue about anything). Well, it is now Ireland turn, and as the below chart shows, the Irish bank run has already commenced, with locals not even bothering to wait until the December 7 coordinated "pull your money" pan-European D (for default)-Day. Bank of America brings attention to this issue, which will likely be the last liquidity event before not only a full bailout of Ireland has to be implemented, full terms be damned, but becomes the catalyst for ongoing CHF strength as European deposits once again rush to the relative safety of the last remaining relatively stable European currency (and of course gold). The result will be an ongoing squeeze in Switzerland, which we now believe may be one of the first countries from the core to feel the vigilantes' wrath shortly after Spain is bailed out, some time in Q1 2011.
Having absorbed the Irish banking system risk, sovereign liquidity risk reflects banking liquidity risks. Those risks are on the rise following the inability of banks to tap the market for government guaranteed issues and ECB funding increasingly has been required to fill the gap. Richard Thomas, BofA Merrill Lynch’s European Banks Credit Analyst highlights that “headroom” (available collateral to post to the ECB in return for funding) is running low. Even at the Bank of Ireland, he estimates that may be as low as €12bn (~6% of total assets). As was the case in Greece, deposit flight stands as the short term catalyst to ultimately force a liquidity intervention.
Deposit flight from Ireland accelerated in September, the latest month available, to a 3.6% annual rate. Clearly, with market prices eroding since then it is probable that deposit outflows continued in October and November. Under such a scenario we would expect a liquidity intervention solution to be forced by the threat of further liability funding pressure that would result from such deposit flight. That would mark a short run liquidity solution to a long run solvency problem.
Looking at all this, the traditionally somber Jeffrey Rosenberg sees no easy way out.
In the near term, that should help to alleviate the systemic risk concerns as the sovereign risk issues in Europe are again postponed. But postponement does not equate to a solution and while such an outcome may be near term supportive of asset prices, that outlook should not be confused for a longer run positive outlook. As in our recent assessment of the benefits of further quantitative easing, the benefits of such a strategy are front loaded and the risks back loaded.
Translation: With even BofA throwing in the towel on Europe, an ECB QE event may be just around the corner if the liquidity gusher is not stopped imminently. In other news, just like Dubai was the first short across the bow in the sovereign default race last Thanksgiving, so a year later, we finally start to see just how rickety the entire sovereign tower of cards is. We predict that by next thanksgiving, the entire Bismarckian welfare-state structure will be completely restructured.
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Ah, the luck of the Irish. Time to look for that pot of Gold at the end of the rainbow.
Yes, welcome back Irish punt.
Isnt that all we do now? Hear about pots o gold at the ends of all the crap colored rainbows?
I was hoping they look for the real Gold, not the fantasy promoted by the IMF nor the myth promoted by the Ponzi.
don't worry. It's all written on paper!
This world runs on thrust.
And if you can't thrust the banksters, now who can you trust?
So that's why the rainbow appears to end in your back yard.
;>)
How apropos that Judy Garland sang "Somewhere Over The Rainbow" in "The Wizard of Oz"?
http://www.youtube.com/watch?v=QhzbzwPNgXA
thank you for the JUDY GARLAND / OVER the RAINBOW song .......... you made my day happy.
Try this.
A YouTube play list of 40 Judy Garland songs. I have it playing now.
The Leprechaun uses ribbed condoms inside out, so that he gets the pleasure
I looked, turned out it is fools gold, and already pledged to FRBNY.
Lizzy,
You're the only critter here on ZH that can turn my rainbow from color to black & white and still make me smile. :>)
You mean the "OTHER" end of the rainbow.
All debt all the time. Everyone must restructure - go bankrupt and repudiate debt.
It'll be ugly, but the sooner the better.
Ahhh yes...Bank of America. People we can count on. A few weeks ago, I suggested a fun run of our own. Right there. With a pingback.
http://thecivillibertarian.blogspot.com/2010/11/fun-run-on-bank-of-ameri...
Spain will need an Bailout not in 1/2011.
They need it before x-mas.
What do you base this on?
The Caja problem is not soved, it is only hidden.
Jobless rate in spain is over 20%
House prices still fall.
and not to forget... the look to the Bonds.
http://www.bloomberg.com/apps/quote?ticker=GSPG2YR:IND
http://www.bloomberg.com/apps/quote?ticker=GSPG10YR:IND
Maybe i`m wrong... but i would bet a beer on this outcome ;-)
No, I know all that, but I wonder what makes you map out the time range which you do?
The speed of the irish implosion leads me to that.
It started on the 18.10.2010 until this weekend. From start of the rising spreads to the Bailout.
So it took around 4 Weeks.
So why should it take longer with spain ?
No cutting in line! Portugal staked out their position next, Spain will simply have to wait their turn. You to Italy, your next after Spain! Don't worry Germany has enough credit rating to float you all so don't rush, don't rush!
Exactly, Portugal SHOULD go first, but if Spain is smart, it will jump line. It's starting to be earliest in will get most help and emerge earlier than those that must follow . . . and almost ALL will follow in Western World.
While everyone is focused on the PIIGs, better keep your eye further east. Watch BRUHA - Bulgaria, Romania, Ukraine, Hungary and Austria. Doesn't matter that IMF is already in Hungary and Ukraine - not stable, and housing hasn't been accounted for with its currency issues in Hungary and the overreach in Ukraine is gonna have a domino effect.
Those Irish trying to get ahead of the bank run curve, good on them. Show the mainland how it's done!
Entire system by next Thanksgiving? A bold prediction, particular when they have proved so adept at kick the can. Still would be something we can all be thankful for next year.
Is that a pic of one of those Amish dudes who builds furniture in the garage? Exiting once in awhile to piss and to fuck up the whole world monetary system? Did you lose a bet, sir?
I wish they'd stick to just drinking and driving cars on Rumspringa.
I wish! Think of how much better the world would be if Zimbabwe Ben and Krazy Krugman instead of going down the road of "economics" had made furniture for a living.
Don't know why they like the beards. I know if I was pillaging the global economy I would grow a big porno stash. It's just the classy way to go!
If I'm eating Spam next Thanksgiving, I'll remember you said that :-))
Hey, at least you'll be eating! Glass is half full!
Spam I am. And green eggs and ham. :>)
Sliced thin and fried in bacon grease is the way to eat spam. Has the two major food groups, protein and fat. Yum.
RUN O'CONNOR!! RUN!!
Next month the sequel: THEY'LL BE BACK!
Or you can get a San Fran municipal bond yielding 10%...
As the financial meltdown enters what an IMF economist recently called "its second phase"and as the sovereign nations of Europe increasingly become targets for the institutional investors, hedge funds, and bond rating agencies and are picked apart in the process, the IMF will inevitably become the lender of last resort much as the Federal Reserve has become the source of an endless hurricane blizzard of monetization in the United States. With most of the so-called developing world firmly in its grip, the IMF will now be free to concentrate on the EU which as become the latest and most lucrative platform for the enrichment of its conglomerate partner corporate and financial institutions
What should I do?
I'm in Dublin right now but I just bought tickets on the Lusitania bound for South Korea.
Should I go or stay?
Demand for my presence of a State Visit is growing.
Rumor has it I may be needed in Iran, Jerusalem, even Venezuela.
Or how about some nice European city....say....Sarajevo?
hrh ADF
If you go there will be trouble
but if you stay it will be double
I had no idea the Lusitania had passage to the Koreas and carried the likes of Dukes and Lords. I must book my ticket at once so I can find your safe and loot your gold.
Here's to hoping the Irish go to gold and silver and deny the government and the banks a shot at their wealth. It might actually be our patriotic duty to help the Bostonians smuggle some "tea" shipments to those lovely fellas at the IRA. Now to be designated as :"freedom fighters".
Dip buyers obliterated....
Enjoy it while it lasts! Some 'conventional' economists (i.e. Krugman's gang) are suggesting that Uncle Ben should cut the BS and start buying equities outright..
I decided not to look at any more charts for at least 2 weeks.
I'm feeling sick in my stomage like a 10 year old that has to go to school when I watch my portfolio...
It seems the Irish have taken Eric Cantona seriously:
http://www.thisismoney.co.uk/savings-and-banking/article.html?in_article...
A Paddy-Frogeater conspiracy to destroy the world!
I find this interesting even as the Irish bailout not being official. Their government is collapsing before final approval. Ireland is going to default over the next few months and tell those ECB/IMF mofos to pack it.
must be following virgil's 'starve the IMF beast' plan, withdraw funds from Irish banks, buy ag/au, short us stocks.. we have tools at our disposal time to use them.
I can only wonder when we will see this here in America. It's coming!
It's a lot bigger than Bismarck. Bismarck didn't have complete control of Germany, it was still under British Influence (note his removal). The question is, which read of Bismarck do you take. The one that followed American's influence? The one that gave the finger to the imperialists? Or the one that was eventually thrown out by the British and blamed for all bad consequences of that AND the return of British Imperialist tactics thrust upon Germany?
http://www.larouchepub.com/lar/2010/3702question_before_us.html
Before laying everything at the feet of bismarck, a little info might be best assimilated.
http://www.larouchepub.com/lar/2009/3619end_sykes.html
http://www.larouchepub.com/lar/2009/3636phys_econ.html
Funny how the brits destroy a person who was going to rid their parasticial nature from Germany, and then make it seem like it was HIS policies and not the BRITISH policies that ruined them. Here is a quote from one of the above (the last one).
"Nonetheless, in defiance of clear evidence (but, in favor of a rather "free hand" variety of interpretation of isolated facts), a significant selection of citizens of the Federal Republic of Germany go out of their way in what is often a frankly "anti-American" effort to deny the crucial role of the influence of the leading economist of the Nineteenth Century, Henry C. Carey, in informing Chancellor Otto v. Bismarck personally of those strategic principles of the American System of political economy, advice which guided the seemingly miraculous progress of Germany from the late 1870s, up through the dumping of Bismarck by the most foolish nephew of the British Prince of Wales, in 1890. Since that dumping of Bismarck which turned out to be among the most crucial factors leading into the ups and downs of all of the major wars and near-wars of the Twentieth Century, my point respecting Bismarck's affinities for the American System of political-economy, has considerable importance for anyone who might imagine that he or she is competent to lead, or even to advise, any great nation of the world, such as our own U.S.A., today. It were not possible for competent historians to misinterpret Bismarck's actions in the way that is often done, unless one were determined to ignore the most important facts about Bismarck's strategic role, globally, and in respect to the leading importance of that role in the entire sweep of the global strategic history of modern, post-Westphalian Europe and the Americas, even to the present day."
It's the British System that has less than a year left.
Welfare systems in a monetary system eventually don't work, because monetary systems break down, THUS breaking down the welfare state.
IT ISN"T BECAUSE OF IT, it's anciliary. What is (has) destroyed(ing) US is the same parasite that destroyed Germany after Bismarck, the FUCKING BRITISH EMPIRE.
No spending by the state is sustainable under the British Imperialists, including a welfare state. So the key is, not to get rid of welfare, but to get rid of BRITISH IMPERIALISM.
SO again, it's not Bismarck, it's the fucking BRITISH EMPRIE. Today known as Inter-Alpha Group of TBTF banks.
The austrian school are a bunch of fools because they can't separate monetarism from anything else. It's like to Austrians, there can be ONLY imperialism, and monetarism. Thus another flawed ideology, limited in scope to something much less than what reality really is. It's not welfare, it's the British empire.
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