Belgium

Tyler Durden's picture

Guest Post: Europe's Precarious Banks Will Determine The Future





It is easy to get the impression that the naysayers are wrong on Europe. After all the predictions of Armageddon, ten-year government bond yields for Spain and Italy fell to the 4% level, France which is retreating into old-fashioned socialism was able to borrow at about 2%, and one of the best performing bond investments has been until recently – wait for it – Greek government bonds! Admittedly, bond yields have risen from those lows, but so have they everywhere. It is clear when one stands back from all the usual euro-rhetoric that as a threat to the global financial system it is a case of panic over. Well, no. Europe has not recapitalized its banking system the way the US has (at great taxpayer expense, of course). Therefore, it is much more vulnerable. Where European governments and regulators have failed to make their banks more secure it is because they tied their strategy to growth arising from an economic recovery that has failed to materialize. The reality is that the Eurozone GDP levels are only being supported at the moment by the consumption of savings; in orther words, the consumption of personal wealth. Wealth that is not infinite; and held by those not likely to tolerate footing the bill for much longer.

 
Tyler Durden's picture

Frontrunning: June 26





  • Scalpel in Hand, Chinese Premier Li Stirs Reform Hopes (Reuters)
  • Obama Sets Conditions for Keystone Pipeline Go-Ahead (FT)
  • World’s Most Indebted Households Face Rate Pain (BBG)
  • SAC Probers Weighing 'Willful Blindness' Tack (WSJ)
  • Draghi Says ECB Ready to Act, Calls for Investment Over Tax (BBG)
  • U.S. Tops China for Foreign Investment (WSJ)
  • Basel Presses Ahead With Plans to Limit Bank Borrowing (FT)
  • Gillard Ousted as Australia PM by Rival Rudd (FT)
  • Japan Economic Strength Will Show in Stocks, Nishimura Says (BBG)
 
Tyler Durden's picture

European Stocks Plunge To Seven-Month Lows; Banks In Bear Market





The narrow EuroStoxx 50 index is now at its lowest in over seven months (-5.4% year-to-date and -12.5% from its highs in May) and the broader EuroStoxx 600 is also flailing lower. The European bank stocks pushed down to their lowest in almost 10 months and are now in bear market territory - down 22.5% from their highs. Spain and Italy are now testing their lowest level in 9 months. While the sovereign bond market had been relatively quiet last week, it started to catch down to stocks today with Portugal, Spain, Italy, and Belgium all giving up significant parts of their Draghi-promise gains. Europe's VIX broke above 26% for the first time in almost 10 months. Think that there should be a flight-to-safety? Think again - Swiss 2Y rates spiked to 10.1bps (remember it was -44.5bps in August 2012) - their highest in 22 months. EURUSD smashed lower in the pre-open US and then oscillated higher in the most mechanically odd manner for the rest of the EU day...

 
Tyler Durden's picture

"A Classic Minsky Trap Appears To Have Developed"





For the past several years, a firmly entrenched psyche of ‘win-win’ for risk-taking behavior has dominated. The thinking has been that the Fed would either help achieve a sustained recovery (allowing distorted prices to be validated by economic fundamentals), or the FOMC would provide more price-boosting liquidity. Now, faith in this proposition is slowly being eroded. Global central banks have collectively provided $11 trillion in liquidity over the past several years. The initial moves were taken to spark domestic demand, but some recent external actions have been retaliatory in nature, implemented as a means to influence currency levels. These new forms of hostilities are indications that the external ramifications of QE policies may no longer be passively tolerated.

 
Marc To Market's picture

US Jobs maybe Overshadowed by Market Unwind





US jobs data is important, but other forces are at work that seem more powerful.

 
Tyler Durden's picture

The Most Over/Under-Valued Housing Markets In The World





House prices - with respect to both levels and changes - differ widely across OECD countries. As a simple measure of relative rich or cheapness, the OECD calculates if the price-to-rent ratio (a measure of the profitability of owning a house) and the price-to-income ratio (a measure of affordability) are above their long-term averages, house prices are said to be overvalued, and vice-versa. There are clearly some nations that are extremely over-valued and others that are cheap but as SocGen's Albert Edwards notes, it is the UK that stands out as authorities have gone out of their way to prop up house prices - still extremely over-valued (20-30%) - despite being at the epicenter of the global credit bust. Summing up the central bankers anthem, Edwards exclaims: "what makes me genuinely really angry is that burdening our children with more debt to buy ridiculously expensive houses is seen as a solution to the problem of excessively expensive housing." It's not different this time.

 
Tyler Durden's picture

It's A "0.6%" World: Who Owns What Of The $223 Trillion In Global Wealth





Back in 2010 we started an annual series looking at the (re)distribution in the wealth of nations and social classes. What we found then (and what the media keeps rediscovering year after year to its great surprise) is that as a result of global central bank policy, the rich got richer, and the poor kept on getting poorer, even though as we predicted the global political powers would, at least superficially, seek to enforce policies that aimed to reverse this wealth redistribution from the poor to the rich (a doomed policy as the world's legislative powers are largely in the lobby pocket of the world's wealthiest who needless to say are less then willing to enact laws that reduce their wealth and leverage). Now that the topic of wealth distribution (or rather concentration) is once again in vogue, below we present the latest such update looking at a global portrait of household wealth. The bottom line: 29 million, or 0.6% of those with any actual assets under their name, own $87.4 trillion, or 39.3% of all global assets.

 
Pivotfarm's picture

Tax Burden in EU





Algirdas Šemeta, the European Commissioner responsible for Taxation and Customs Union, Audit and Anti-Fraud has announced in a speech that there are ten nations in the EU that need to cut the tax burden on labor if they are going to aid the growth of the European Union. They are hindering investment and holding back output of firms across the EU, although he admits that it is not reducing the tax burden alone that will solve the problems of the economic crisis.

 
Tyler Durden's picture

Belgian Central Bank Says 25 Tons Or 10% of Gold Reserves on Loan





The Belgian Central Bank said yesterday that about 25 tons of the European nation’s gold reserves have been lent to bullion banks according to Bloomberg. Nearly 10% or about 25 metric tons of the National Bank of Belgium’s remaining 227.5 tons of gold reserves are currently lent to bullion banks, Director and Treasurer Jean Hilgers told the central bank’s annual meeting in Brussels. The proportion of gold reserves on loan declined from 84.3 tons on December 31, 2011, and averaged 48.1 tons in 2012 as loans matured and some gold loans were reimbursed early. Hilgers said that the Belgian central bank sees gold lending decreasing further this year. During the 1990’s, Belgium sold some 1,000 tons of gold into the market - more than three quarters of its remaining holdings. The Belgian gold reserves, which had already seen sizeable liquidation in late 1978, fell from 33.7 million ounces on 12/31/88, to just 5.7 million ounces on 03/31/98, or a fall of 83% in less than 10 year.

 
Tyler Durden's picture

Europe's Quantitative Easing





Most people do not think that Europe engages in Quantitative Easing. They know that the United States engages in it, that Britain engages in it and now that Japan engages in it but they think that Europe has so far refused to be involved. They think this because this is what they have been told. Unfortunately this is inaccurate. The European Quantitative Easing takes place every day just not in the manner utilized by America and others. However, it takes place all the same and it is done in a manner to circumvent the rules of the European Union. This is also why the ECB has such a massive balance sheet. What Europe has done is gotten around their own regulations which forbid the ECB from lending money directly to nations.

 
Tyler Durden's picture

World's Largest Steelmaker Urges Europe To Declare Trade War On China





Currency wars are so pre-"QE eternity." At least that is the opinion of Indian multi-billionaire Lakshmi Mittal, and owner of the world's biggest steelmaker, who urged Europe to embrace protectionism and erect trade barriers to "protect" its manufacturers (benefiting one ArcelorMittal among others), while at the same time bashing austerity, saying "the futures of EU manufacturing depended on politicians in Brussels helping industry face what he said was unfair competition from China." In other words, it's time for Europe to escalate into full blown trade warfare with China. It is unclear if Mr. Mittal had any thoughts on how China would, in turn, escalate to this progression in trade warfare: whether with tariffs, subsidies, or outright dumping. What does appear quite clear is that the owner of ArcelorMittal, who on Friday posted a net loss of $345 million (down from a $92 million profit a year earlier) on Q1 sales plunging by 13%, whose stock is just off its 52 week lows, and who said he may close plants in Eastern Europe if the "economy continues to slump", may have some ulterior motives in asking that Europe fight his war for him.

 
Tyler Durden's picture

Now It's Britain's Turn To Choose





If England does not wake up and recognize what is happening then it will be Neville Chamberlin all over again. Appeasement is never a good answer and today no war is threatened just financial domination. Over time, if Britain remains in the European Union, they will get pushed down into the mud, lose their ability to govern themselves, watch as their financial institutions get trampled by Frankfurt. The Germans will force them into a space presently occupied by Greece, Slovenia and Cyprus. Retribution for two World Wars will finally be won in Berlin.

 
Tyler Durden's picture

Frontrunning: May 8





  • Pentagon Plans for the Worst in Syria (WSJ)
  • Russia and US agree to Syria conference after Moscow talks (FT)
  • Hedge Funds Rush Into Debt Trading With $108 Billion (BBG)
  • Detroit is the new "deep value" - Hedge funds in search of distress take a look at Detroit (Reuters)
  • Commodities hedge funds suffer weak first quarter (FT)
  • But... but... Abenomics - Toshiba posts 62% decline in Q1 net profit (WSJ)
  • Americans Are Borrowing Again but Still Less Than Before Freeze (WSJ)
  • Man Utd announce Alex Ferguson to retire (FT)
  • Asmussen Says ECB Discussed ABS Purchases to Spur SME Lending (BBG)
  • Benghazi Attack Set for New Review (WSJ)
  • Belgium Says 31 People Arrested Over $50 Million Diamond Theft (BBG)
  • Brazilian diplomat Roberto Azevêdo wins WTO leadership battle (FT)
  • Bangladesh Garment Factory Building Collapse Toll Reaches 782 (BBG)
 
Tyler Durden's picture

Guest Post: A Short History Of Currency Swaps (And Why Asset Confiscation Is Inevitable)





With equity valuations no longer levitating but in a different, 4th dimension altogether, and credit spreads compressing dramatically (and unreasonably)... It is in situations like these, when the crash comes, that the proverbial run for liquidity forces central banks to coordinate liquidity injections. However, something tells me that this time, the trick won’t work. Over almost a century, we have witnessed the slow and progressive destruction of the best global mechanism available to cooperate in the creation and allocation of resources. This process began with the loss of the ability to address flow imbalances (i.e. savings, trade). After the World Wars, it became clear that we had also lost the ability to address stock imbalances, and by 1971 we ensured that any price flexibility left to reset the system in the face of an adjustment would be wiped out too. From this moment, adjustments can only make way through a growing series of global systemic risk events with increasingly relevant consequences. Swaps, as a tool, will no longer be able to face the upcoming challenges. When this fact finally sets in, governments will be forced to resort directly to basic asset confiscation.

 
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