The first from Zero Hedge. This looks at a report out from Morgan Stanley on the status of Euro banks and the issuance of LONG-TERM debt. The bottom line is that as of August there is no long-term debt market for the EU financials.
NOTE: This is not T. Durden talking. This is the white spats boys @MS. When “The mother of all cheerleaders” starts writing stuff like this; it is worth noting.
Next from FTAlphaville who comments on a Fitch report Re: US money market funds draining cash from European banks. This was a July data report. Things have gotten much worse since then. The July data scared the crap out of (even) me.
It has been well know that the MMFs were leaving the weaker countries in the EU. What is scary to note however is that the money funds are leaving Germany too. The largest month over month decline came from German banks. Shocking!; is my reaction. Essentially the MMFs are saying, “NO EUROPE”.
There is some evidence in the money markets of what is going on behind the scenes. Libor rates for Euros and dollars are elevated. The forward currency swap spreads are also evidencing a tightness in the dollar funding market. That said, I don't see the evidence on my screen that we are at a bend point in this story. I think the quoted prices are not where real business is getting done.
The interbank deposit rates that are the basis of the quoted pricing may well be the rate that a Citi does business with a Chase. But these quotes have nothing to with the rates that a Banca Nazionale del Lavoro is currently paying for cash money.
I believe that a number of the big liquidity providers to EU banks are charging a big premium for money these days. I'm sure that there is growing list of EU financials that are looking for money and finding that their traditional providers are no saying:
.
Note: On that title I used today; a side story.
At one point long ago I found myself in the position of being long an FX cash position with a London based French bank. On the other side of this was a short futures position with a street broker by the name of Refco.
There are only two ways out of this situation. One has to either (1) unwind the futures and also the cash or (2) try to do a “give up” of the cash position to the broker. (netting).
This was a several billion dollar position. More often than not the unwind approach costs money (the futures market is very smart at spotting this type of stuff). So I asked the French bank if they would do the wash trade with Refco. (Note: this was very common)
I recall the exact response that was given (with a heavy French accent).
.
At first I didn’t get it. The wording was not the usual, “We don’t take that name”. But it did mean the same thing. The French bank simple would not do business with Refco. I undid the position(s), and it cost me. The "Bad Address" thing stuck with me.
One side note to the story is that on 10/10/2005 Refco was busted for lying to the public. Refco claimed to have a $530mm IOU on the books. Actually, it was worthless. Refco went Chapter 11 a few days later. Phil Bennet, the Refco CEO went to the slammer for 16 years.
The other side note is; Europe is becoming a “Bad Address”.
.
what has energy efficiency to do with being an energy importer/exporter?
Means that Denmark has to have a 100% backup (coal fired plants) to their "green" windfarms. Cycles the shit out of the coal units as the wind energy waxes and wanes across the farms. Energy flows go nuts (that's what "smart grid" is really all about).
Furnace combustion gets way inefficient and pollution goes nuts as well (can't get to a steady state).
So the "efficiency" is just of the wind-machines, not of the total system. Sub-optimized around the "efficient" piece, but have to keep the grid frequency steady. Therefore, energy importer.
It's stupid, but if feels soooooo good and superior-like.
- Ned
FYI: Sweden is trying to be carbon-neutral before 2020 (if I remember well). Denmark is world #1 in wind power. Germany, Spain and Portugal are using more and more renewable energy (Solar, Wind, Tide, etc), France has a large number of nuclear power plants, etc.
Energy consumption per capita in Europe is 1/3rd that of the USA.
Energy-efficient, maybe not, but certainly a lot better than the United States of America.
On the other hand...
If the world economy goes into real decline, I think Europe is much better off short term. Long term, I'm not so sure. The "American Dream" is primed for a beating, regardless.
With fewer guns on the street and more local community oriented socialist (gasp!) attitudes, many areas of Europe will definitely be better off than the US.
Will still be ugly and rough though. If Russia decides to stop supplying energy to Europe for instance.
war will break out in europe.
in the end, sharia law will be instituted across the eurozone.
go long praying mat & burkha manufacturers.
seriously did you leave europe with the Columbus boat in 1492 or the Mayflower in 1620? You seem out of touch. The burqua will not be imposed in Europe. It will most likely also disappear in moslem lands in the 21st centruy. Stick around. What happened to fundamentalist christianity will happen to fundamentalist Islam.
I guess you haven't studied the history of Europe and Russia this last 100 years. The muslims will be driven out of Europe very quickly once it's no longer cool to be multicultural and the economy cracks The recent London-area riots will be child's play if Europe gets going in a serious way, but the target won't be "the rich". It'll be the "foreigner". Go long pitchforks and molitov cocktails and trails of tears back to the desert homelands
Safer, dream on. Virulent nationalism (racism, gasp!) is a centimeter below the surface here in Europe waiting for economic hardship to start a holocaust on the Turks living in Austria and Germany. Guns in private hands not necessary when the police will be carrying out the New Nationalist agenda.
And middle east stopping delivery of oil to US?
Usa will have to buy regional : Canada, Venezuela, Mehico. Europe will have to buy from Russia, its natural partner as well Africa and ME. We are going regional as hi-costs of energy mean minimizing transport component.
Russia has to sell its oil like ME to Europe/Asia. Its the SPLIT which could be cause for future conflict.
I'm a great believer long term in Desertec type projects. New frontiers....new technologies. Do or die time, like in 1492. Don't look back and count your losses when the Turks took Constantinople in 1453. That's where Europe is now.
Game changer.