Transatlantic Financial Risk Inverts: European Bank Default Risk Greater Than American For First Time

Tyler Durden's picture

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Rick64's picture

So the best horse in the glue factory award once again goes to the U.S..

Mr Lennon Hendrix's picture

This and the glue factory's roof is on fire.

DoChenRollingBearing's picture

Buying any banks would be at the very bottom of my list of investments, says the Bearing, an unhappy FAZ holder, so take my investment suggestions with a rock of salt.

Muir's picture

A blast from the past from zero



"On September 30, 2008, the SEC and the FASB issued a joint clarification regarding the implementation of fair value accounting in cases where a market is disorderly or inactive. This guidance clarifies that forced liquidations are not indicative of fair value, as this is not an "orderly" transaction. Further, it clarifies that estimates of fair value can be made using the expected cash flows from such instruments, provided that the estimates reflect adjustments that a willing buyer would make, such as adjustments for default and liquidity risks."


pure art.

you gotta admire it

Muir's picture

for those that forget:

(look at the dates please)



Section 132 of the Emergency Economic Stabilization Act of 2008, titled "Authority to Suspend Mark-to-Market Accounting" restates the Securities and Exchange Commission’s authority to suspend the application of FAS 157 if the SEC determines that it is in the public interest and protects investors.

The Emergency Economic Stabilization Act of 2008 was passed and signed into law on October 3, 2008. On October 7, 2008, the SEC began to conduct a study on "mark-to-market" accounting, as authorized by Sec. 133 of the Emergency Economic Stabilization Act of 2008.[15]

On October 10, 2008, the FASB issued further guidance to provide an example of how to estimate fair value in cases where the market for that asset is not active at a reporting date.[16]

On December 30, 2008, the SEC issued its report under Sec. 133 and decided not to suspend mark-to-market accounting.[17]

On March 10, 2009, In remarks made in the Council on Foreign Relations in Washington, Federal Reserve Chairman Ben Bernanke said, "We should review regulatory policies and accounting rules to ensure that they do not induce excessive (swings in the financial system and economy)". Although he doesn't support the full suspension of basic proposition of Mark to Market principles, he is open to improving it and provide "guidance" on reasonable ways to value assets to reduce their pro- cyclical effects.[18]



On March 16, 2009, FASB proposed allowing companies to use more leeway in valuing their assets under "mark-to-market" accounting, a move that could ease balance-sheet pressures many companies say they are feeling during the economic crisis.





lsbumblebee's picture

Here's a quote with some meat on it from Bob Chapman:

"...the euro still has about 7% gold backing, something the US dollar and all other currencies do not possess."

LeBalance's picture

good luck finding that physical.

lsbumblebee's picture

Forget physical. The market certainly has. The point is that for what it's worth anymore, the Euro is at least partially backed by gold, and the dollar is backed by Mr. Whipple.

jdrose1985's picture

*convertibility to gold/oil

PeterB's picture

If Ben Bernanke is Mr Whippee then I'll take one double dip choc top thanks. Oh! don't forget that many a good cock has come out of a tattered bag.

buzzsaw99's picture

Skank of Amurkin is uber-smart.

FranzVanDongen's picture


20-seat loss forces early exit for Dutch PM as party leader


Liberal party won the elections. It wants to cut spending with 23 billion a year. More deflation.


williambanzai7's picture

The AIG bailout was one big whitewash. Now the paint is wearing thin on the Euro bailout whores.

aus_punter's picture

there is always the risk that some european banks become nationalised and their liabilities become government obligations , hence leading to a tightening in their credit spreads somewhat

a popular trade has been to go long risk via the banks index and short corporates against it based on the view that higher funding costs will be passed on and that the relationship has to normalise..... not going to happen that way IMO

Celsius's picture

US banks are insolvent. Without properly applying FASB 157 there is no way that one can claim US banks are in better shape the Europe's.