This page has been archived and commenting is disabled.

European Highlights: November 3

Cheeky Bastard's picture




 

Good morning ZeroHedgers

 

British Chancellor of the Exchequer Alistair Darling is set to inject another 38 billion pounds into the two nationalized British banks; RBOS and Lloyds. We have reported this on numerous times in our European column, but the surprise move is the amount which will be injected into the two banks. As mentioned before, the first nationalized British bank; Northern Rock, was granted a permission by the EU regulatory body to be broken up into numerous smaller parts and later sold off to potential investors. In a recent development th two aforementioned banks have started to sell their branches and are preparing themselves for the future sales procedure. This is only a part of a broader picture. Let me remind you, the financial regulatory body of the EU insists that the banks which are considered to fall into TBTF category be broken up, or if the brake up is impossible, be even tightly regulated than the smaller European banks. As you may well know the regulation in the EU zone is a class above than the regulation in the rest of the world. As many European politicians know; one of the major contributors to the prolonged World Depression in the 1930s was the bankruptcy of a major European bank Creditanstalt AG. When the excessive clusterization of the EU nations began in the early 1990s the main idea of building a sustainable financial environment was to structure the regulatory frame so that the event like Creditanstalt AG bankruptcy in the 1930s has no possibility of happening again. Hence, after the last major crisis broke out, the forces of Keynesianism have done everything in their power to prevent another European financial bloodbath. It is needles to say, that on a long enough timeline the survival rate of all Keynesian policies drops to zero.

Poland's president Alexander Kwasniewski is critical of the actions which were done by the Polish Central Bank, and which have resulted in the country not joining the EU monetary zone in the foreseeable future. As we all know Pland was the most reselient on the EU nations in the past 2 years. Strong monetary and fiscal policy combined with an equilibrium in banking practices resulted in Polands good economic health. But the recent pressure coming from the EU and EU banking institutions resulted in the widening deficit for the CE economy. The European Commission expects Poland’s general government deficit to widen to 6.6 percent of gross domestic product this year and to as much as 7.3 percent of GDP in 2010. The government expects to post a budget deficit of 6.3 percent of GDP this year, more than double the EU’s 3 percent threshold. The Polish central bank’s Monetary Policy Council said today that the shortfall may exceed 7 percent of GDP, a “size that arouses concern. ”Poland won’t be ready to swap the zloty for the common currency until at least 2014, Kwasniewski said.

We can proudly announce that we have a new title holder in the " The costliest banking bailout in the history of the known world" category. With the recent infusion of another 42 billion $, RBOS has now officially taken the title from the former title holder; Citigroup. The amount which would need to be given to a banking institution for it to take the title away from RBOS would need to be in excess of 280 billion pounds. But even further capital injections can be expected.

A recent development concerning EBRD. The European Bank for Reconstruction and Development offered its diagnosis of the illness which struck the economies of Central and Eastern Europe. In its report the EBRD says the main anomaly in the economies of the SEEE region is the irrational distribution of capital and irrational baking practices. With non-existent, or barely developed equity markets, and strong quantity of national resources the countries of SEEE region have become a pray for western banks and western corporations which with the help provided to the by the EBRD dominate SEEE economies. Here is a brief graphical representation of the percentage which Western banks hold in East-European banks.

 

             

 

As we can see, the region is highly dominated by Western banks. And that would be no problem if the banking practices were in any way similar to the baking practices those banks conduct on the Western European market. But they are not. With the high concentration of consumer loans and not enough business loans the economies of SEEE will remain dependant on the mercy of the Western banks. The EBRD facilitates this banking business model by providing the loans to business by taking the share of their equity AND forcing them to repay the loan as if it is a standard loan. Another graphic demonstration of the ruinous situation in SEEE is shown in the following graph.

 

                           

 

 

These are just some of the problem SEEE is experiencing for almost 20 yrs now, and we here at ZH are focused on continuing to report on a frequent basis about the feudalistic business practices conducted in SEEE. Also, what is worth noticing is the number which denominates the vulnerability of a particular country. The table below shows it best. 

 

 

 

 

 

These are some of the other headlines concerning world economies:

 

  • Saudi crude exports fall to 22-year low (Platts)
  • City of London derivative market face strict EU regulation (Telegraph)
  • India; banks cut credit targets (ET)
  • European bankers oppose regulation (WSJ)
  • IMF reaffirms Poland's 21.8 billion credit line (Bloomberg)
  • Lag in the recovery expected in Eastern Europe, the Baltic (Bloomberg)
  • Problems for Danish banks (Bloomberg)
  • Record recession for UK economy (al-Jazeera)
  • Soros calls for a global deal (surprise surprise)(Reuters)
  • Trouble flares in Niger delta (FT)
  • US-China Yuan tussle (Reuters)
  • Obama doesn't care about Easter Europe, calls it "Bush's pet program" (EurActiv)
  • Evans-Pritchard on Japan (Telegraph)
  • Thoughts from Daniel Hannan (Telegraph)

 

These were some of the more important headlines concerning non-US economies. We will continue to monitor the situation in SEEE and will report on it daily in this column. Given the importance of that region we will be focused on that. Also any further development with RBOS and Lloyds will be reported in this column. An interesting situation is developing with KSA US oil exports, and if any new information emerges we will report on it. Also any further regulatory development will be reported. What I urge you to do, is to study the economic conditions in Eastern and SE Europe, as well as any new actions undertaken by the IMF, ECB and EBRD. Also, the crackdown on the CDS trading practices is expected to pick up, and that will also gain some of our attention.

Thank you for reading.

 

 

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 11/03/2009 - 16:37 | 118795 trx
trx's picture

More from the EU:

“EU27 surplus in trade in goods with the USA down by half in the first six months of 2009.”

Here’s the doc.

Tue, 11/03/2009 - 16:37 | 118794 deadhead
deadhead's picture

Thank you again for this outstanding update!  I love your european update cheeky and appreciate the enormous effort you are giving for the benefit of ZH readers.

 

 

Tue, 11/03/2009 - 16:10 | 118744 trx
trx's picture

Some new figures from the EU Commission today:

·         All countries in the Eurozone are expected to break one of their basic fiscal rules over the next two years by increasing their deficit to over 3 %.

·         The Eurozone will as a group reach a deficit of  7,7% of GDP in 2010.

·         France is expected to reach a deficit of 8,2%/GDP next year.

·         Unemployment rate forecast: 10,25%

·         Norwegian PMI Index shows industry is still contracting.


Press release from EU.

Press release from Fokus Bank on PMI Norway.

Tue, 11/03/2009 - 15:26 | 118646 MinnesotaNice
MinnesotaNice's picture

So the United States now only holds the Silver Medal  in the Financial Olympics with our athlete Citigroup... so sad... we better get busy over here with some more illegal steroids :-)

We can proudly announce that we have a new title holder in the " The costliest banking bailout in the history of the known world" category. With the recent infusion of another 42 billion $, RBOS has now officially taken the title from the former title holder; Citigroup.

BTW Cheeky... like your stuff :-)

Tue, 11/03/2009 - 15:29 | 118662 Cheeky Bastard
Cheeky Bastard's picture

Thank you MinnesotaNice

but dont be said, i am sure that there is a provision in the bailout 2.0 which says that the title must again reside with the US bank .

Tue, 11/03/2009 - 14:56 | 118567 Anonymous
Anonymous's picture

The flu pandemic in the Ukraine is very fishy. Suddenly, there's ten-fold up-tick out of the blue. Any more details on this.

Tue, 11/03/2009 - 14:00 | 118439 Anonymous
Anonymous's picture

what is england and europes problem, don't they understand the goal is too extend and pretend, not too try and do the right thing..........gosh, if you're not carefull folks might extrapolate if xyz is happening there, ie, banks worsening, why they might think it in other places, god forbid in duh us of anything is possible if you simple click you're ruby slippers 3 times

Tue, 11/03/2009 - 14:00 | 118438 Anonymous
Anonymous's picture

what is england and europes problem, don't they understand the goal is too extend and pretend, not too try and do the right thing..........gosh, if you're not carefull folks might extrapolate if xyz is happening there, ie, banks worsening, why they might think it in other places, god forbid in duh us of anything is possible if you simple click you're ruby slippers 3 times

Tue, 11/03/2009 - 13:49 | 118419 Gunther
Gunther's picture

The German numbers for wholesale-turnover for 3Q09 got reported:
all numbers compared to same Q of last year
Wholesale turnover nominal -17.2%, real -8.8%
Pre-production    nominal -25.8%, real -12.1%
Consumer goods    nominal -4.8%, real -4.3%
agricultural, including live cattle, nominal -23.5%, real +0.5%   

http://www.ad-hoc-news.de/grosshandel-3-quartal-2009-grosshandelsumsatz-...

German Retail (Y/o/Y):
Jan   -1.3%
Feb -5.3%
Mar -1.5%
Apr -0.8%
May -2.9%
Jun -1.6%
Jul -1%
Aug - 2.6%
Sept -3.9%
http://econo-matrix.blogspot.com/2009/10/d-einzelhandelsumsatze-real-39....

Tue, 11/03/2009 - 12:57 | 118334 heatbarrier
heatbarrier's picture

Outstanding, CB, outstanding.

EU banks are "Too Big To Save", UK is trying to break them up, other countries should follow their lead, including the US,

http://www.ft.com/cms/s/0/61d7e148-8f15-11dd-946c-0000779fd18c.html?ncli...

BTW, Tyler was hinting at "rumors" obout UBS, keeping my ears close to the ground.

Tue, 11/03/2009 - 13:03 | 118349 Cheeky Bastard
Cheeky Bastard's picture

thanks man ....

yeah i heard the same thing from my swiss compadres ....

the word is that after the IRS shakedown they had a sort of a bank run or something .... if something comes up on that during the day, ill write an emergency post, that is if Tyler doent get to it first, which he will .... but nevertheless ...

Oh, and thank you for all your sources .... that article i was talking about should be out this week .... im sick so I cant deep in it like i would like to ... but it will come ... ill track the crisis all the way from the Creditanstalt AG BK till the recent actions ...

Tue, 11/03/2009 - 15:17 | 118617 BRAVO 7
BRAVO 7's picture

 here is another you seemed to have missed.

 G 20 MEETING NOV.6-7   DOLLAR DUMPING DELIBERATION

   http://www.prweb.com/releases/G-20/US_Dollar/prweb3150584.htm

"MONEY IS THE GOD OF THIS WORLD, AND ROTHSCHILD IS HIS PROPHET"

  benjamin disraeli

Tue, 11/03/2009 - 15:21 | 118637 Cheeky Bastard
Cheeky Bastard's picture

unfortunately i cant post that in the main body of the article, due to some credibility i need to have, but im all for it that you discuss it in the comment section.

and not only that, but i share your opinion on this matter, its just i dont want to give a potential bullet to the mofos who visit this site in search of a piece of data, or source or an article which they can use to bring down ZHs reputation. But i have read all the material on that, and am very familiar with this matter.

Tue, 11/03/2009 - 13:23 | 118380 heatbarrier
heatbarrier's picture

UBS continues to lose clients in their private bank.  5xGDP, UBS is my worst nightmare.

  Nov. 3 (Bloomberg) -- UBS AG, Switzerland’s largest bank, fell the most in two months in Swiss trading after redemptions by wealthy clients accelerated in the third quarter.

“The core private banking franchise still seems to be hurting,” said Florian Esterer, who helps manage about $49 billion at Swisscanto Asset Management in Zurich. “The money outflows are still bad across all divisions.”

http://www.bloomberg.com/apps/news?pid=20601087&sid=a2h0MQoC4nR8&pos=2

Do NOT follow this link or you will be banned from the site!