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ECB Has €444 Billion PIIGS Exposure, A 4.25% Drop In Asset Values Would Bankrupt European Central Bank

Tyler Durden's picture


As if insolvent European private banks were not enough to worry about (and with banking assets of 461 percent of GDP in the UK, 178 percent in Germany, and 820 percent in Switzerland, there is more than enough to worry about), a new study by Open Europe has found that at the heart of the insolvency argument is none other than the only hedge fund that is even worse capitalized than the US Federal Reserve: the European Central Bank. "With Greece forced to seek a second bail-out to avoid bankruptcy, Open Europe has today published a briefing cataloguing how the eurozone crisis could drive the European Central Bank itself into insolvency, with taxpayers likely to pick up a big chunk of the bill.  The role of the ECB in the ongoing eurozone and banking crisis has been significantly understated. By propping up struggling eurozone governments and providing cheap credit to ailing banks, the ECB has put billions worth of risky assets on its books. We estimate that the ECB has exposure to struggling eurozone economies (the so-called PIIGS) of around €444bn – an amount roughly equivalent to the GDP of Finland and Austria combined. Of this, around €190bn is exposure to the Greek state and Greek banks. Should the ECB see the value of its assets fall by just 4.25%, which is no longer a remote risk, its entire capital base would be wiped out." It seems that in crafting "prudent" capitalization ratios courtesy of Basel 1 through infinity, the global NWO regulators totally let the ECB slip through the cracks. The finding also confirms what we have been saying all along: there is no way that any form of voluntary or involuntary phase transition that will require the ECB to mark down assets that it has on its books at par (yet are worth 50 cents on the dollar) can ever occur: such an event would result in the immediate insolvency of the European lender of first and last resort, and, in turn, the unravelling of the Eurozone.

From Open Europe:

"The ECB’s attempts to paper over the cracks in the eurozone may have temporarily softened the impact of the crisis, but have exacerbated the situation in the long-term. The ECB has dug itself into a hole and now we are seeing that there is no easy way out.”

“Huge risks have been transferred from struggling governments and banks onto the ECB’s books, with taxpayers as the ultimate guarantor. There’s a real risk that these assets will face radical write-downs in future with eurozone governments and banks teetering on the edge of bankruptcy. This amounts to a hidden – and potentially huge – bill to taxpayers to save the euro.”

“The ECB’s wobbly finances and operations to finance states have landed a serious blow to its credibility. It must now seek to become the strong, independent bank that electorates were promised when the Single Currency was forged.”

Key points from the report:

- In parallel with the IMF’s and EU’s multi-billion euro interventions, the ECB has engaged in its own bail-out operation, providing cheap credit to insolvent banks and propping up struggling eurozone governments, despite this being against its own rules. The ECB is ultimately underwritten by taxpayers, which means that there is a hidden – and potentially huge – cost of the eurozone crisis to taxpayers buried in the ECB’s books.

- As a result, the ECB’s balance sheet is now looking increasingly vulnerable. We estimate that the ECB has exposure to struggling eurozone economies (the so-called PIIGS) of around €444bn – an amount roughly equivalent to the GDP of Finland and Austria combined. Although not all these assets and loans are ‘bad’, many of them could result in serious losses for the ECB should the eurozone crisis continue to deteriorate. Critically, struggling banks in insolvent countries have been allowed to shift risky assets away from their own balance sheets and onto the ECB’s (all the while receiving ECB loans in return). Many of these assets are extremely difficult to value.

- Overall, the ECB is now leveraged around 23 to 24 times, with only €82bn in capital and reserves. In contrast, the Swedish central bank is leveraged just under five times, while the average hedge fund is leveraged four to five times. This means that should the ECB see its assets fall by just 4.25% in value, from booking losses on its loans or purchases of government debt, its entire capital base would be wiped out.

- Hefty losses for the ECB are no longer a remote risk, with Greece likely to default within the next few years – even if it gets a fresh bail-out package from the EU and IMF – which would also bring down the country’s banks. We estimate that the ECB has taken on around €190bn in Greek assets by propping up the Greek state and banks. Should Greece restructure half of its debt – which is needed to bring down the country’s debt to sustainable levels – the ECB is set to face losses of between €44.5bn and €65.8bn on the government bonds it has purchased and the collateral it is holding from Greek banks. This is equal to between 2.35% and 3.47% of assets, meaning it comes close to wiping out the ECB’s capital base.

- A loss of this magnitude would effectively leave the ECB insolvent and in need of recapitalisation. It would then have to either start printing money to cover the losses or ask eurozone governments to send it more cash (via a capital call to national central banks).  The first option would lead to inflation, which is unacceptable in Germany, while the second option amounts to another fully fledged bail-out, with taxpayers facing upfront costs (rather than loan guarantees as in the government eurozone bail-outs). 

- The ECB’s actions during the financial crisis have not only weighed heavily on its balance sheet, but also its credibility. First, as a paper published by the ECB last year noted, “The perceptions of a central bank’s financial strength have an impact on the credibility of the central bank and its policy”.  Secondly, by financing states, the ECB has effectively engaged in fiscal policy – and therefore politics – something which electorates were told would never happen.

- Worried about the risk of these potential losses being realised, the ECB is vehemently opposed to debt restructuring for Greece and other weaker economies. However, continuing the ECB’s existing policy of propping up insolvent banks – and intermittently governments – would be even worse for the eurozone as a whole.

- The ECB’s cheap credit has served as a disincentive to struggling banks to recapitalise and limit their exposure to toxic assets in weak eurozone economies. This creates moral hazard for banks and governments alike, at times even fuelling the sovereign debt crisis, while transferring more of the ultimate risk to taxpayers across Europe. Therefore, in its attempt to soften the immediate impact of the financial crisis, the ECB may in fact have exacerbated the situation in the long-term, increasing the cost of keeping the eurozone together for taxpayers and governments.

- Moving forward, the ECB must return to its original mission of promoting price stability and a way has to be found to get ailing banks off the ECB’s life support. This should include a winding-down mechanism for insolvent banks.

Full report below:

ECB Open Europe


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Tue, 06/07/2011 - 07:32 | 1346250 qussl3
qussl3's picture

Frankly the easiest way to bail out the banking system is to have the PIIGS default, declare the ECB insolvent then do a EU wide one time recapitalization levy.

If they want to go for MAD, go all the way.

Tue, 06/07/2011 - 07:42 | 1346269 Crisismode
Crisismode's picture

If the PIIGS default, then they take all of Europe, and then all of the rest of the western industrial world with them.

It's not as tidy as just letting a couple small governments renounce their debts . . . the entire world financial system is so interlocked that once the first dominoes fall, the rest soon fall afterward.

Tue, 06/07/2011 - 07:51 | 1346282 Dr. No
Dr. No's picture

Hank Paulson, is that you?

Tue, 06/07/2011 - 10:42 | 1346763 Ahmeexnal
Ahmeexnal's picture

ETARP (European Troubled Asset Relief Program) to be announced, by rETARD Trichet.

Tue, 06/07/2011 - 08:20 | 1346337 qussl3
qussl3's picture

Well the tidiest it will get is if the ECB takes all PIIGS "assets" off the banks at par, raise reserve requirements so the "good" money doesnt go nuts in velocity and then have the PIGGGS declare a simultaneous default. After that just do a 15% EU wide income/wealth levy to recapitalize the ECB.

Problem is the bankers who have the heads up on this will be stashing all their cash in CHF, ......... wait..

Tue, 06/07/2011 - 09:32 | 1346550 Lieutenant Dan
Lieutenant Dan's picture

The EU will never mark to market their assets. We are doing the same thing in the United States. Thats what keeps us "solvent". If the Brics establish well developed sustainable economies that don't depend on the ponzi countries, they will be able to tell the Eu and the US that the joke is over.

Tue, 06/07/2011 - 08:26 | 1346350 three chord sloth
three chord sloth's picture

Yep. And that doesn't even take the whole derivatives scam into account. What would all this do to the 10x World GDP Sword-of-Damacles CDS market?

Tue, 06/07/2011 - 09:05 | 1346459 Reptil
Reptil's picture

Yes, and when a system becomes unmanagable for the purpose it was set up, and even becomes a disruptive force, there's only one way to solve this issue in a capitalist system, and that is to abandon it and let it die.

Just the day before yesterday in a discussion an angry and frightened person threw the following question at my feet:

"so then, where do you keep your money!? how can you argue this point, when you yourself are at risk?"

Tue, 06/07/2011 - 14:33 | 1347636 StychoKiller
StychoKiller's picture

Answer is easy:  PMs, Pb & high-speed delivery devices, beans, booze, anything with a store of value -- cause FRNs sure ain't!

Tue, 06/07/2011 - 08:40 | 1346382 Re-Discovery
Re-Discovery's picture

EURO printing will begin in earnest UNLESS unrest moves to Germany.

Tue, 06/07/2011 - 10:33 | 1346740 Urban Redneck
Urban Redneck's picture

It interestingthat the Eurozone is still waiting on Trichet & Juncker to pull a repeat of the Paulson & Bernanke 2008 extortion performance.  Meanwhile, Greece skipped the IOUs and has erupted in riots and they don't even have California's $500B in outstanding state & municipal debt. 

Tue, 06/07/2011 - 07:34 | 1346252 dcb
dcb's picture




Tue, 06/07/2011 - 07:47 | 1346281 Cash_is_Trash
Cash_is_Trash's picture

Nationalization of lossezz

Tue, 06/07/2011 - 07:57 | 1346297 speedy
speedy's picture


woud you mind not shouting please?  My ears hurt!

Tue, 06/07/2011 - 09:02 | 1346461 Reptil
Reptil's picture

those are real, aren't they? (not the ears)

Tue, 06/07/2011 - 14:37 | 1347680 StychoKiller
Tue, 06/07/2011 - 07:31 | 1346254 writingsonthewall
writingsonthewall's picture

Going down, going down, going down.....

I wonder when the ECB will admit there is a problem? - perhaps after the major banks disappear and the 'contagion' takes the world back into recession.

Is this some sort of revenge on America? - you seel us crap, our banks will bankrupt your banks and we'll all go down the tubes together.

I never thought economic armageddon would be so much fun - one minute it's the US, then it's the EU, then it's everyone else, then back to the US etc....

What's the shorting on banks these days? - surely everyone knows that EU banks are finished - it's just a matter of when...

Tue, 06/07/2011 - 07:36 | 1346262 Id fight Gandhi
Id fight Gandhi's picture

It's like ping pong. Probably eating to be shorting time.

Tue, 06/07/2011 - 07:32 | 1346255 Josephine29
Josephine29's picture

The problems of the European Central Bank just go on and on. It has perhaps the lowest quality collateral on its books of any mid/major sized central bank. Ironically as the Notayesmanseconomics blog points out it was boasting about this only 2 years ago. From a speech by Mr.Trichet to Munich university.

The second building block of our new liquidity management approach is the list of assets that we take as collateral. This list was already very long before the crisis. We have enlarged it further and now accept an even wider range of securities as collateral. Government securities account for less than half of the nominal value of the securities on the list. The rest are private securities. By contrast with many other central banks, the ECB already accepted private paper before the crisis. In this sense, we were fairly well prepared for the crisis, as we had a relatively “modern” collateral framework. As a consequence, the total value of these eligible securities is currently €12.2 trillion, equivalent to 130% of the GDP of the euro area. This very broad range of eligible collateral has considerably eased banks’ liquidity constraints during the crisis.

Mindful Money


I guess many others will now be asking the question of what this “modern” collateral framework means in terms of losses as values in places like Greece have collapsed...

Tue, 06/07/2011 - 07:57 | 1346290 A Man without Q...
A Man without Qualities's picture

"It has perhaps the lowest quality collateral on its books of any mid/major sized central bank."

Everyone seems happy to forget what the Fed bought in the first round of QE.... never mind Maiden Lanes...

Tue, 06/07/2011 - 07:33 | 1346256 SWRichmond
SWRichmond's picture

Obviously, the world needs another, new level of financial obfuscation, capital-from-nowhere, to bail everyone out.  SDR!

Tue, 06/07/2011 - 07:36 | 1346261 Crisismode
Crisismode's picture

But it's not real money anyway . . . .

 . . . just a bunch of 0's and 1's on a few hard drives.

Wipe the drive, reinstall the OS, and create a bunch of new 0's and 1's

Tue, 06/07/2011 - 07:38 | 1346259 BlackholeDivestment
BlackholeDivestment's picture

...Built on Sand? That's beyond generous.

Tue, 06/07/2011 - 07:39 | 1346260 oogs66
oogs66's picture

The ECB has become a huge roadblock to solving any problem.  So many of their holdings had nothing to do with the daily functioning of the economies.  Trichet embarked on a program of secondary market purchases which are killing the ECB and the governments that fund it!

Tue, 06/07/2011 - 07:40 | 1346263 kaiten
kaiten's picture

How could a central bank go bankrupt? They´ll just print few more trillions. Problem "solved".

Tue, 06/07/2011 - 07:41 | 1346264 Sean7k
Sean7k's picture

During the Weimar hyperinflation, the only thing that mattered to the German people was one: constant adjustment of wages and two, printing enough money to pay it. 

No one questioned if this caused inflation, they blamed it on other outside influences and the people went along.

We often act as if people are rational. However, when the wolves howl and pace, the herd moves together and panics. Something cowboys use to lead them to their eventual slaughter- that mindless run into the gaping jaws of death.

Academics have the job of recording the history of these roundups- the official version to be taught each new generational herd and the harder to find "alternative" versions which could save their lives. 

Tue, 06/07/2011 - 07:42 | 1346267 swissinv
swissinv's picture

On thing to consider is that the 820% of Swiss GDP number mainly results from UBS giant where 80% of operation lies in the US. While a bankruptcy of the biggest bank would be certainly catastrophic for the Swiss, I doubt that the gov. has any incentive nor the money to bail it out. 

Tue, 06/07/2011 - 08:03 | 1346300 buzzsaw99
buzzsaw99's picture

the bernank guarantees all usa and euro banks.

Tue, 06/07/2011 - 07:43 | 1346270 Greeny
Greeny's picture

What EUR doing at $1.46? Should be 1:1 at least.

Look at that CHF, insane valuation. USD used buy 4 Swiss

Franks in 70's

Tue, 06/07/2011 - 07:54 | 1346289 topcallingtroll
topcallingtroll's picture

This is great for the dollar!

We can rebalance and recover at european expense.

Tue, 06/07/2011 - 09:05 | 1346468 Reptil
Reptil's picture

Yes. And that's the plan. Like a tag team off a cliff...

Tue, 06/07/2011 - 07:46 | 1346273 godzila
godzila's picture

As far as I am concerned the ECB can and will print Euros at will - not a good idea but it will never be "bankrupt"

Tue, 06/07/2011 - 07:55 | 1346285 topcallingtroll
topcallingtroll's picture

Yeah....double entry bookkeeping for a central bank is just a figleaf. Public doesnt understand or care. Just print. You have no respect or credibility anyway.

Tue, 06/07/2011 - 07:49 | 1346275 earnulf
earnulf's picture

ECB has about 1.895 Trillion Euro's on it's books, 23% of it is PIIGS, much is just plain crap that was loaded on during the "easy" phase of accepting everyone's belly lint as gold thread.

I think it's time to MAD everything and let it all shake out.   At least then we can get back to something solid instead of all this fiat.

Tue, 06/07/2011 - 07:49 | 1346276 THE DORK OF CORK
THE DORK OF CORK's picture

They have a shit load of Gold on their balance sheet or at least they claim they have - CBs cannot go bankrupt with such a asset.

Tue, 06/07/2011 - 08:19 | 1346342 qussl3
qussl3's picture

China will be very very very unhappy if they go that route.

Not to mention the Ruskies.

Tue, 06/07/2011 - 07:50 | 1346278 PaperBear
PaperBear's picture

ATLANTA—Treasury Secretary Timothy Geithner called for global standards in the way derivatives contracts are structured in order to prevent a global "race to the bottom."

Is this guy having a laugh or what ?

He is a former Wall Street banker and these banks lobbied long and hard to keep derivatives unregulated.

AIG's bailout of $180BN saw $13BN go to Goldman Sachs for their CDS on the mortgage S**T they sold investors.

Tue, 06/07/2011 - 08:10 | 1346323 EscapeKey
EscapeKey's picture

Oh, don't worry. PD's are considered to do an excellent job self-regulating, and hence will receive waivers. The standards will only apply to everyone else, raising the cost of competition.

Tue, 06/07/2011 - 07:51 | 1346283 equity_momo
equity_momo's picture

I've still got some Track and Field awards in the attic from the 80s, i wonder if i can pledge them as collateral. Few hundred vinyl LPs too , thats got to be worth a medium sized housing development to the ECB.

Tue, 06/07/2011 - 08:00 | 1346294 anvILL
anvILL's picture

Should the ECB see the value of its assets fall by just 4.25%, which is no longer a remote risk, its entire capital base would be wiped out.

Wonderful. It is significantly less levered than the FRB.

Tue, 06/07/2011 - 08:09 | 1346318 poydras
poydras's picture

The ECB is most likely already insolvent on a true mark to market basis.  The objective of Extend & Pretend is pretending that the subject entity is solvent.

This problem would not exist if banks operated on a Reg T type leverage (e.g 2:1).  This 12+:1 coupled with horrible underwriting is a clear recipe for insolvency.

Remarkable!  The recipe is a success!

Tue, 06/07/2011 - 08:11 | 1346325 EscapeKey
EscapeKey's picture

ALL major banks are insolvent on a true mark to market basis, not just the ECB.

Tue, 06/07/2011 - 08:10 | 1346321 Zero Debt
Zero Debt's picture

ECB leverage of 23-24x is approaching Lehman Brothers leverage of 30x in the end of 2007. And we all know how that went.


Tue, 06/07/2011 - 08:12 | 1346328 EscapeKey
EscapeKey's picture

Lehman couldn't print money, however. How do you think this crisis will ultimately be "solved"?

Tue, 06/07/2011 - 09:08 | 1346466 Zero Debt
Zero Debt's picture

Most likely the endgame is the failure of the European central bank.

ECB has 82 billion Euro in capital and reserves. In this article the scenario painted out is that Greece restructures half of its debt forces losses of 44-66bn eur. This is 53%-80% of the entire capital base. Recall back in end of 2010 that ECB boosted the capital base because they were worried about sovereign bond losses. This is why. At that time, they got the cash (5 bn eur) from 16 national central banks. The crux this time is that Greece is indirectly also linked to these other national central bank's ability to meet a margin call from the ECB. As monetizing these debts would wipe out the confidence in the system, there would be severe political pressure for central banks to help the ECB. Now consider the study done by Reggie Middleton. He claims that in order to restructure the debt to be in compliance with the Maastricht Treaty, Germany would lose 23% of Tier 1 capital of their domiciled banks. Rates in the Eurozone in general would face severe upward pressure to attract deposits to cover the shortfall, of course, as is happening in Hong Kong right now despite lots of "liquidity" in the system. Thus the national states will not be able to have the cookie and eat it, e.g. save both the ECB and their own national banks as the national banks are squeezed between recapitalizing ECB and recapitalizing their own banks. As the savers holding the pitchforks are more likely concerned with their savings in Germany, the choice is obvious. Recall also that Dagong rates Greece sovereign credit as CCC, Standard and Poor rates it B so restructuring is pretty much a fact, the rest is more or less a matter of formalities.

Now an alternative way for the ponzi to buy time would be that the US Fed extends temporary swap lines to the ECB. The initial swap lines were 20bn USD in 2010 which is approx 13.7 bn EUR. However this would fall way way short of the credit losses of PIIGS ggiven how levered ECB now is as they don't want to be doing monetization. Again, from the article, the exposure to PIIGS is 444 bn EUR. The Fed swap line of 13.7 bn eur would supposedly be a temporary measure. But such hope is premature, many economists do not believe Greece would grow its economy until 2013 or 2014. Same story for Spain and most other post-bubble economies. The purpose of the swap lines are overnight and short-term funding only. That can hardly be stretched 2-3 years ahead. And while the Fed could provide discount window funding to European banks, thus easing pressure on the national ones, it would hardly be feasible over a multi-year period. All Fed swap lines are scheduled for shutdown in less than 2 months, August 1, 2011. With the end of QE2 that is a double whammy from the Fed, one for the US treasury, one for the various other central banks.

All of the above, after all, are just temporary measures and various forms of central planner musical chairs and money printing. Hedge accordingly.

Tue, 06/07/2011 - 10:19 | 1346679 Zero Debt
Zero Debt's picture

And it gets worse...

German banks according to DIW have 7,600 bn euro in assets, three times Germany's BNP, but only 350 bn in capital. The leverage ratio of the entire German banking system is thus 21.7x, not much different from ECB. So beggar-thy-neighbor wouldn't work, because Germany is in no better shape than the ECB. AND....among their assets are 230 bn euro exposed to the PIIGS. Which means.. PIIGS can wipe out 65% of the capital of the entire German banking system, perhaps in a matter of days or weeks, or equivalently leverage these banks to 7600/120 = 63x. And this figure is an aggregate because no doubt certain institutions may be even more seriously exposed.

On top of this..any rational saver would not really prefer their saving to be leveraged 21 times by the bank meaning that your hardly earned euro has beeen lent out 20 times over, not even mentioning 63 times over to a less stellar concoction of debtors. AND...did anyone say BASEL II. Under basel 1, sovereign debt was risk weighted 0%. Hello yeah that Greece is a 0% risk asset. With 8% capital the maximum leverage is 12.5x. Plus, a higher risk weighting on subpar sovereign debt changes weightings. Conservatively this requires the current leverage in the entire German banking system, the largest economy in Europe, to be cut by half by say 2015. So what does that mean for rates. Etc.

Tue, 06/07/2011 - 13:21 | 1347374 Tom_333
Tom_333's picture

Don´t worry. ECB will just lend a leaf out of the Fed playbook and  print...print...print...and print some more.And you know - it works!

Tue, 06/07/2011 - 13:30 | 1347406 desgust
desgust's picture

wonderfull contribution!

Thank you.

Yes, let us see the European bankstas and the socialst sheeple go to hell!

Tue, 06/07/2011 - 09:16 | 1346497 fockewulf190
fockewulf190's picture

One nasty black swan event is all it is going to take to push the eu back into the dark ages.

Tue, 06/07/2011 - 08:16 | 1346334 scratch_and_sniff
scratch_and_sniff's picture

It's like sticking my head in a spin-dryer. So the possible solutions; Get a bail out(from china? or EZ) Slow down cheap money to bad banks and tell them to stay away from peripheral debt(How long do these banks need propping up, it cant be much longer until we find out the final costs), print money…I can smell the Heidelberg GTO’s purring as we speak. I couldnt see the ECB getting its knickers in a twist with that many can-kicking options on the table.

Tue, 06/07/2011 - 08:25 | 1346354 TopOnePercent
TopOnePercent's picture

Solution is simple.


Do what the US does and simply change the mark to market accounting rules.

Tue, 06/07/2011 - 08:40 | 1346381 ParaZite
ParaZite's picture has yet again started to censor any real news put up in their comments section. Please feel free to flood them with real news. I do it, just to piss them off. 


Tue, 06/07/2011 - 08:51 | 1346435 lizzy36
lizzy36's picture


Force austerity down the throats of millions of euro citizens, all because the people at the top fucked up again.

This will end it tears, it always does.

Tue, 06/07/2011 - 09:26 | 1346536 oogs66
oogs66's picture

I still don't understand why Trichet has come away relatively unscathed so far.  His decisions, particularly his open market purchases, have backfired horribly.

After DSK, and Trichet, why do we want another French person in charge of some 3 letter supra-national agency?  Lagrande at the IMF - what a great way to use American money to bail out European banks.

Tue, 06/07/2011 - 09:45 | 1346562 falak pema
falak pema's picture


NOT DEFENDING ECB BUT THE MEGA SHIT OF FINANCIAL PONZI BEGAN IN USA WHERE IT ALL ORIGINATED....THE REST IS ACCUMULATED COLLATERAL DAMAGE OF EURO BANKS BEING SEDUCED INTO THE GLOBAL PONZI... And now unable to find their own way out they take down the people of Eurozone! Greece being a case apart as the whole country, is a total economic Ponzi (unlike Portugal, Ireland and Spain...which is ALL private bank created).

Wow, what a meltdown!

Tue, 06/07/2011 - 14:20 | 1347575 earnyermoney
earnyermoney's picture

The nationality of the central banksta is not important. They all belong to a fascist club that will sodomize the currencies they were entrusted to safegaurd.

Tue, 06/07/2011 - 09:49 | 1346588 mraptor
mraptor's picture

They just have to devalue more.... gold is revalued every quoter, so if they devalue their balance sheet gets better. As long they devalue less than USA, it should be OK.

That's why we see this see-saw between the 3 major currencies and it will continue as long as possible.

Tue, 06/07/2011 - 10:55 | 1346826 AldoHux_IV
AldoHux_IV's picture

All ponzi's have to come to an end as it's a self-defeating model. It's what's been happening with most major developed economy-- a shift of risk: attempt at transferring poor assets into public hands. It's not going to end well for the TPTB. No more bailouts for flawed infected institutions and the end game is near for these central banks and their banking masters.

Tue, 06/07/2011 - 11:32 | 1346947 midnight
midnight's picture

Why does ZH post speculative trolling and wishful thinking garbage? Do you just dump here any kind of crap that comes from UK without evaluation. Where can you find proof that Spain and Italy are in trouble?


Tue, 06/07/2011 - 11:39 | 1346985 midnight
midnight's picture

Zero Hedge staff, you are making a disservice to your readers by picking the UK Eurosceptic views and pasting them here, just because it's the only native English source in Europe.

Tue, 06/07/2011 - 18:37 | 1348790 jackbooted gauleiter
jackbooted gauleiter's picture

So finally after 20 years we find that Maggie Thatcher was right all along.

She opposed the single currency, and suggested instead that there be a common currency running in parallel with the national currencies, which would be legal tender in all the states of the EC, and which people could choose to use when and where it was appropriate.

I look forward to the sight of all the politicians who rejected and over-rode this proposal abasing themselves publicly, and offering up their fortunes as a penance and a partial recompense for their bad advice and ill judged actions.

What are the odds that I'll be disappointed? 

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