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The European Crisis In Eight Simple Charts
While none of the below information will come as news to regular Zero Hedge readers, as we have been discussing the European debt maturity cliff for over 5 months, here is a simplified representation of why anything and everything that the EU, ECB and the IMF can do now is simply delay the inevitable disintegration of the eurozone and the upcoming eventual debt payment moratorium.
Via Der Spiegel, courtesy of Cheeky Bastard.
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Tyler last week you had a chart showing the " Weekly Gross and Net CDS Notional Change in Week 4/26-4/30" is there any way possible you could show the same information for week 5/3-5/7.
As this was excellent info and may I ask where one can obtain this from is it from a Bloomberg feed ????
Cheers
I second that request it was some of the more useful info out there.
Data comes from dtcc.com and is updated each Tuesday. The last week's data will be available in 48 hours.
I guess it needs a membership to see this data ?
No password is required.
Here is the link:
http://www.dtcc.com/products/derivserv/data/index.php?lpos=home_slot3&li...
everyone but ireland is pretty smooshed up against that short end... i wonder how much interest they're gonna have to offer folks to buy it when they want to roll it over...
look at all the folks over the -3% maastricht debt limit.
i'm sure it's been this way for a while, but the phrases 'extend and pretend' and 'mark to myth' take on new meaning when you look at these charts.
this would be an interesting study on the 50 states
nutz
Hey, why would you want to show this study vis a vis the 50 states in the US... America is already in denial, so why do you want this country to start looking like Watts in 1964? Why do you think the gov't here has been kicking the can down the road all this time? :) We all know this will not end well.... give us some more time to grab some shiny metal.
Aug, let's say you have a small wart on your wrist, and you say, "I don't want to know what that is, because then I might have to have a surgery and I hate needles and doctors." So several months later, you begin having a tremendous ache in your arm, it hampers you at work, you favor it and therefore you don't go to the gym, your life begins to slide, but still you don't want to see the doctor. One night on the way home from work, a massive electrical bolt of pain runs up your arm. You jerk the wheel of your car and it heads into oncoming traffic. The first car dodges you, but the second, a family of four, coming home from the mall is not so lucky. The husband and son die, the wife is uninjured, but can not deal with the incident regardless of any amount of love and caring she receives during the remainder of her life. The daughter hits her head on the back of the seat in front of her, she is confined to a wheel chair and needs 24.7 care throughout her life. And my friend that is only the first car you hit, not the next 6 and the cars they hit, when they leave the lanes of safety. That is not the families and communities that are devastated. That is not the rescue workers and hospital facilities that deal with the victims. ....the impact is gigantic....
So "You can deal with it now, OR you can deal with it later."
This did not end well for France in the 1780's, just ask Napoleon. This did not end well for 1920's Germany, just as Adolf.
How much worse than either of those two examples do you want to get, because we are already on par with both, the shit just hasn't hit the fan?
Is the nightmare black or are the windows painted?
http://www.youtube.com/watch?v=1vvRN09HZ_4
Would like to see the study for Florida, Michigan, Arizona and California... we need an catchy ZH acronym for these 4 states...
I actually think Florida is doing pretty good. Our State Constitution will not allow for deficit spending. Jeb Bush clean out all the funds with too much money in them...our State savings account. The roads and parks have been looking like crap for years. The state workers make peanuts......unless you are in the top 5% administration, they are banking it, just like Wall Street. We have empty government buildings...just waiting for corporate take over.
What corporate take over? Boiler rooms? Land scams? Florida isn't exactly known for it's solid business practices during down turns. Most of the times cheap rent usually turns into affordablity for dirt bags to move in a sell the local population down the river.
Tis true, but I think the "take over" was in the cards the whole time. You can't find a government loyal to any of its "local population" and willing to stand up to the dirt bags. Hence...here come the corporations looking for a hand out and tax relief.
FACM? as in Frack 'em?
the USA economy is going to Hell ... fast.....
I called up my local law office who does lots of bankruptcies..
they said >>> We are much , much , more busy than last August.
and last August they were swamped.. I know , I was there...
They added more paralegals , more office space... they even work
saturdays to keep up....
Looks like everything is going to hell... fast....
Nice charts, makes it easier to demonstrate to others what the problem(s) is.
I too would like to see similar charts for other countries, if someone knows where to find them, but I think it's really just academic now. Second graph makes it all too clear that it all comes down to confidence.
Another country starts spiking up like Greece, and they're all gonna go. Clearly that won't be far away.
Seems we're about to find out just how interesting these times we live in really are.
The US Treasury debt wall is the elephant in the middle of the room, and his farts stink by far the most. Up until now, he has gotten away with pointing his finger at everyone else, but once the match is lit everyone will get blown sky high...
heh, being able to fart in the room with little recourse - who'd ever thought there'd be so many perks to being a reserve currency.
I am missing France on the first chart (which should be 'better' than last on each of the graphs), is Der Spiegel biased?
I wonder, why is the spotlight on eurozone, when the projected budget deficit of eurozone is the smallest of all big developed economies? As chart 3 shows, it´s projected to be 6,9%. In Japan the deficit is projected to be around 10%, in US 11% and in UK above 13%.
And the last year deficits were:
eurozone - 6,3%
japan - 9%
US - 10%
UK - 12,3%
Good point. It's why I think the ongoing sovereign debt speculation may be misguided in many cases. Despite high unemployment and the bursting of a speculative real estate bubble Spain has very little sovereign debt relative to GDP. Italy has a relatively high debt level but is running a deficit only slightly higher than Germany. Unless Spain or Italy falter I remain skeptical that the Eurozone will fail.
The sad part is that much of this crisis arises from a misguided effort to protect French and German banks from losses on Greek debt. A haircut would appear to have been a cheaper solution. Of course the cynic in me can't help but notice how fortunate the decline in the EUR is for Eurozone exporters.
I totally agree. Euro is a political project whether one likes it or not. The purpose is to remove any chance of another war within the EU zone.
Look at the Estonians (and all Balt states for that matter) and their herculean sacrifices to get accepted by the €-zone as quick as possible. These people know what the allternative is (russia) and that is not pleasant. So whatever the Anglos say, the € is here and it will be here tomorrow along with the USD. If both disappear, then I will not be here. That is Armageddon people.-2
all good points, it seems any expensive bailout is done only when its for banks....all the supposed help homeowners in US got was only done to help banks pretend about their reserves, so on...
it seems any expensive bailout is done only when its for banks
Exactly. Or did you mean bankers?
Kaiten
Excellent question. Short answer.
It is not the amount of debt so much as it is the cost of debt which is the collective short and long term interest rates paid.
Nice charts. I will raise you two more.
http://bit.ly/BkGWc
It is not the amount of debt so much as it is the cost of debt which is the collective short and long term interest rates paid.
So we're OK as long as interest rates are low, and we should keep on borrowing? And why are interest rates low? Because the central banks are monetizing. So I guess that's OK? And when the central banks stop monetizing, which will be at a time of their choosing, and we in the meantime have borrowed beyond our means in the short maturities, the effect will kind of be like leverage in reverse, won't it? Will that be OK, too? Or will the central banks just be forced to monetize some more by such an event? Kind of like they just did, right?
So all of this printing doesn't matter, right?
The IMF in their April, 2010 WEO update provides deficit figures/projections as a % of GDP for a number of nations. Greece was the second-worst. The U.S. came dead last. These figures deal with federal/nation numbers, not state/provincial finances. The spotlight keeps shifting. It will eventually shift to the U.K. and then finally (probably) the U.S. However, the spotlight of financial indignation and attack may shift in an unexpected sequence. Time will tell.
Nice observation Kaiten
Ireland's structural deficit is a lot lower than 14.7% ... at least to the extent that massive bank bailouts won't be a recurring feature of the Irish budget.
Agreed, the higher figure is due to the Anglo black hole - if we have the sense to get that misfit off our backs our deficit would drop a bit.
I've uploaded a new DOW chart.
http://www.zerohedge.com/forum/latest-market-outlook-0
http://stockmarket618.wordpress.com
There's some confusion here over how to compare the US fiscal deficit to European fiscal deficits. The European deficit numbers are total deficits including debt service. The US for shiny happy reasons has for a long time reported only its primary fiscal deficit, which in fy09 was about 10% and will be about the same in fy10. For apples-to-apples comparison one needs to calculate the US total deficit including debt service which was somewhere in the 13.5-14% range in fy09 and will be in or near that range in fy10.
Oops
Jeezzz.... Is that so? I had no idea. I fell some giddiness....got to stop reading ZH :-)
Wonder if the Germans will ultimately go it alone. France will get hurt, tensions will rise in Europe, but of course that's the traditional history there. This would make a great movie. Guess what--we're all in it.
yeah, that's the part that sucks...what's the African saying...when elephants fight its the grass that gets trampled...
Germany will come out the winner in this, as long as they do 2 things:
1. Do not give any money or loan guarantees to the dead PIGS
2. Exit the Euro and return to the D-Mark
All the rest are history (including the UK and France)...
As much as I would like this to be a nice orderly and contained collapse, last week sealed my opinion that we now face a systemic calamity that will take all the debtor nations down in a single blackswan event.
It's every man for himself from here on out.
Per the charts, Europe's debt looks more manageable than either the UK or USA. A one or two year safety net coupled with debt reduction measures and compensating stimulus from the ECB and they will be able to muddle their way through.
Then the bond vigilantes will set their sites on the real outlyers - the Anglo Saxon crowd....
Well, we are coming to the end of another banking long con cycle. Deflecting blame from the principles is the key to a successful ending. Usually anything catastrophic will do, war or maybe a mysterious deadly illness this time around. Once the smoke clears, the game can begin again from a "Hey ,we are here to help" perspective. Freed from impending doom, the survivors graze peacefully in the field, trying to remember what all the trouble was..
Our two weapons are fear and surprise...and ruthless efficiency...
http://www.youtube.com/watch?v=njNfTujN5iE
http://www.youtube.com/watch?v=cKx7v-uHDRQ
Moin from Germany,
just for info...
DER SPIEGEL is the most influential news mag here in Germany....
Their cover story ( see link ) won´t add to the already almost non existant confidence....
http://www.spiegel.de/static/epaper/SP/2010/19/ROSPANZ20100190001-312.jpg
On top of this i´ll bet that Merkels CDU will lose the regional elections ( not only related to Greece ). The shift will be to the left.....
The election is by the way in the most populated region representing over 20 percent of all voters in Germany.....
For comparing apples and apples, wouldn't we need to include each US state's debt as well?
OFF TOPIC, BREAKING NEWS , JPMC SILVER FEDS PROBE:
http://www.nypost.com/p/news/business/feds_probing_jpmorgan_trades_in_gZ...
GOD BLESS MICHAEL GRAY
For my first comment on ZH might I offer a little tune that summarizes how I feel about this little place we call Earth:
Double Deuce
http://wyndtunnel.wordpress.com/2010/04/19/song-of-the-week/
- This is home.
http://www.youtube.com/watch?v=U2R2KXNQR1M
One can view these charts as impending doom (which is exactly what the private bankers want the reader to do) or one can just default.
The Euro and Eurozone is a bankers' construct that has allowed mega-banks to wheel-and-deal making life easy for the politicians and pushing the citizen into serfdom.
Default is the better path. Default will lead to short-term misery, but at the same time create economic opportunity for entrepreneurial serfs as they scramble to provide goods and services that were once imported.
This process has been repeated many times before and it will continue as long as there are countries that surrender the right of money-creation to private banks.
Remember a firm called Lehman's?
After scanning faz.net, Handelsblatt and Le Monde I'm told that before the Monday Asian open the Euros will have a big fund which can transfer funds to states in difficulty to deter speculators from selling their debt. And Brits say we understand but we don't want to know you.
"Napalm, son. Nothing else in the world smells like that.
I love the smell of napalm in the morning. You know, one time we had a hill bombed, for 12 hours. When it was all over, I walked up. We didn't find one of 'em, not one stinkin' dink body. The smell, you know that gasoline smell, the whole hill. Smelled like ...victory. Someday this war's gonna end..."
http://www.youtube.com/watch?v=YThN6iqr4SM
Friends are your eyes wide open?
Looks like the Irish have bond duration on their side. Still, the chain sequence will be hard to escape.
Does anyone knows how much money, in US dollars, will be needed to buy all the sovereign bonds offered in 2010 by the governments of US, UK, Japan and all the countries of European Union?
What will be the "grand total" for 2010's bond auctions?
i would do it for you zina, but you can make a start from the bar charts in the article! :)
Cue Warren Zevon:
http://www.reuters.com/article/idUSLDE6480C420100509?type=marketsNews
IMF: The History of Financial Crisis - Note the date. The bookshelf in background always makes an individual seem more knowledgeable. Snickers.
http://www.youtube.com/watch?v=2EMI1p6d8Ak
To all mother's on ZH, Happy Mother's Day!
Did you mean muthas?
"UK budget deficit 'to surpass Greece's as worst in EU'" (Guardian, 05/05)
They will have a 12% deficit and 78% public-debt-to GDP ratio towards the end of the year.
Is the herd looking the wrong way?
for those who want a little context as to the size of projected European deficits (which will need revising sharply upwards since the publication date) you might find this 22 pager informative. The table is on page 4.
http://www.bis.org/publ/othp09.pdf
anyone think that an actuary would come up with a better guesstimate than anyone with a spreadsheet? heh..check this out from theat paper.
A key question is to what extent such accrued liabilities should be reflected in debt estimates. Concerns about both fiscal sustainability and intergenerational equity demand that the accumulated net discounted value of all future revenues and expenditure commitments scheduled in current laws be added to the current debt stock.
and.....
The authors report that in order for these countries to pay off all their financial liabilities, they would require an average improvement in their budget balance excluding interest payments of 4.5% of GDP. For the United States and Japan, the estimate is 6.9% and 6.2%, respectively
weeeeeeeeeeeeeee, so umm..if 3% is a proper deficit target (don't forget I think there should be surpluses of around 3-5% to pay off government debt) and deficits are currently 6-12%, then we need to increase the tax takes by around 40-50% per annum to perpetuate and maintain the current structural fiscal imbalances. (Taxes are around 35% of GDP now and the imbalances is say, 15%). Of course we could cut pending by similar proportions, but hey, how would the fat cats stay fat!
andddddddddddd! over 30 years (page 9) good paper!
The results plotted as the red line in Graph 4 show that, in the baseline scenario, debt/GDP ratios rise rapidly in the next decade, exceeding 300% of GDP in Japan; 200% in the United Kingdom; and 150% in Belgium, France, Ireland, Greece, Italy and the United States. And, as is clear from the slope of the line, without a change in policy, the path is unstable.
they go my way on Table 3 on page 12 look with this narrative:
An aggressive adjustment path to achieve this objective within five years would mean generating an average annual primary surplus of 8–12% of GDP in the United States, Japan, the United Kingdom and Ireland, and 5–7% in a number of other countries.
(stops talking to myself heh)
no, no, please. i was listening, i was.
(there's just something stuck in my tooth here...)
:^)
Wow. Many thanks to Cheeky Bastard. Those charts are eye opening.
Its one of the good platform for awareness of people. Keep sharing such stuff in the future too. xbox 360 s