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When The Duopolistic Owners Of The EU Printing Presses Disagree On The Color Of The Ink!
CNBC reports: France and Germany Clash Over ECB Crisis Role
France
and Germany, Europe's two central powers, have stepped up their war of
words over whether the European Central Bank should intervene more
forcefully to halt the euro zone's debt crisis after modest bond
purchases failed to calm markets.
Facing rising borrowing costs as its 'AAA' credit rating comes under threat, France urged stronger ECB action, adding to mounting global pressure spelled out by U.S. President Barack Obama.
BoomBustBlog readers and subscribers
saw this coming a mile away. The Duopoly that ruled the economics of
the EU have divergent needs now, hence divergent interests. Expect this
to get worse in the near term. The reasons have been spelled out in Italy’s Woes Spell ‘Nightmare’ for BNP - Just As I Predicted But Everybody Is Missing The Point!!! You see, France, As Most Susceptible To Contagion, Will See Its Banks Suffer
because stress in the Italian bond markets will be a direct cause of a
French bank run - with the largest of the French banks running the
hardest BNP, the Fastest Running Bank In Europe? Banque BNP Exécuter. For those who don't follow me regularly, I warned subscribers
on BNP due to the Greco-Italiano risk factor causing a liquidity run
born from imminent writedowns. No one from the sell side apparently had a
clue. Reference the series:
- Saturday, 23 July 2011 The Anatomy Of A European Bank Run: Look At The Banking Situation BEFORE The Run Occurs!: I detail how I see modern bank runs unfolding
- Thursday, 28 July 2011 The Mechanics Behind Setting Up A Potential European Bank Run Trade and European Bank Run Trading Supplement
The
Italian problems were brought to the Attention of BoomBustBlog
subscribers over a year and a half ago (subscribers reference Italy public finances projection
from March of 2010) and each of the major Italian banks undergoing
major distress righ now were identified and outlined over a year and a
half ago as well, when their share prices were multiples of what they
are now. Subscribers should reference Italian Banking Macro-Fundamental Discussion Note.Long
term puts and shorts on these banks (you could've simply closed your
eyes and picked two or three) would have made any fund manager's year.
Those who don't subscribe can still see the aftermath, after the fact,
as referenced by Bloomberg... UniCredit Trades as Junk With $51B Due
Bonds of UniCredit SpA (UCG),
the Italian bank that posted a surprise 10.6 billion-euro ($14.3
billion) third-quarter loss this week, are trading as junk as the lender
prepares to refinance $51 billion of debt coming due next year.
Fixed-income
investors are pricing the Milan-based lender’s bonds at levels that
imply a rating of B1, four levels below investment grade and eight steps
lower than its A2 ranking, according to Moody’s Analytics. The 13.4
billion euros of UniCredit debt securities that are contained in Bank of
America Merrill Lynch’s Euro Corporates Banking index have lost 2.8
billion euros since the start of June.
UniCredit,
Italy’s biggest bank, has the highest amount of bonds maturing in 2012
by a major European lender, according to data compiled by Bloomberg.
Concern that Italy will struggle to cut Europe’s
second-highest debt load and tame the sovereign crisis drove the
country’s debt yields to euro-era records, infecting UniCredit’s 40
billion euros of Italian bonds.
Yeah,
right! "Surprise" , "loss". Interesting terms considering the warning
was given a year and a half ago. Those damn non-BoomBustBlog
subscribers... So, where goes Italy, so follows France...After Warning Of Italy Woes Nearly Two Years Ago, No One Should Be Surprised As It Implodes Bringing The EU With It - or Focus on Greece? No! How About Italy? No! It's About Baguettes, Mes Amis! See also, When French bankers gorge on roasting PIIGS - OR - Can You Fool Everybody All Of The Time?
right! "Surprise" , "loss". Interesting terms considering the warning
was given a year and a half ago. Those damn non-BoomBustBlog
subscribers... So, where goes Italy, so follows France...After Warning Of Italy Woes Nearly Two Years Ago, No One Should Be Surprised As It Implodes Bringing The EU With It - or Focus on Greece? No! How About Italy? No! It's About Baguettes, Mes Amis! See also, When French bankers gorge on roasting PIIGS - OR - Can You Fool Everybody All Of The Time?
The
Catch 22 is that Germany's woes are not that far detached from
France's, yet it appears that they do not see this. I reiterate, then
query again - Italy’s Woes Spell ‘Nightmare’ for BNP - Just As I Predicted But Everybody Is Missing The Point!!! This is a Pan-European sovereign debt crisis, not a southern or western European sovereign debt crisis. The countries fates are inextricably linked.
And for those who believe what Fed Member Bullshitterard said, at least according to CNBC: European Debt Crisis Unlikely to Impact US: Fed's Bullard, I refer you to my extended, self-answered query, "Is
The Entire Global Banking Industry Carrying Naked, Unhedged "Risk Free"
Sovereign Debt Yielding 100-200%? Quick Answer: Probably! " I place this stamp on Bullard's comments...
If you really want to know the truth, simply read my post from yesterday, Squids, Morgans & Counterparty Risk: Blowing Up The World One Tentacle At A Time
Bond
market turmoil is spreading across Europe. Italian 10-year bond yields
have risen above 7 percent, unaffordable in the long term. Yields on
bonds issued by France, the Netherlands and Austria — which along with
Germany form the core of the euro zone — have also climbed.
Asian shares and the euro fell further on Thursday as doubts deepened about Europe's ability to stop its sovereign debt crisis from spinning out of control.
MSCI's broadest index of Asia Pacific shares outside Japan fell 0.2 percent, while Japan's Nikkei stock average opened down 0.5 percent.
The euro
hovered near five-week lows against the dollar, trading not far off
Wednesday's trough around $1.3430, a low not seen since Oct. 10.
"The
ECB's role is to ensure the stability of the euro, but also the
financial stability of Europe. We trust that the ECB will take the
necessary measures to ensure financial stability in Europe," French
government spokeswoman Valerie Pecresse said after a cabinet meeting in
Paris.
French Finance Minister Francois Baroin repeated Paris's view that the euro zone's EFSF bailout
fund should have a banking license, something Berlin opposes. Such a
move would allow the fund to borrow from the ECB, giving it extra
firepower to fight the spreading crisis.
"The
position of France ... is that the way to prevent contagion is for the
EFSF to have a banking license," Baroin said on the sidelines of an
awards ceremony.
But
German Chancellor Angela Merkel made clear Berlin would resist pressure
for the central bank to take a bigger role in resolving the debt
crisis, saying European Union rules prohibited such action.
"The
way we see the treaties, the ECB doesn't have the possibility of
solving these problems," she said after talks with visiting Irish Prime
Minister Enda Kenny.
The
only way to recover markets' confidence was to implement agreed
economic reforms and build a closer European political union by changing
the EU treaty, Merkel said.
ECB
policymakers continue to reject international calls to intervene
decisively as Europe's lender of last resort, stressing that it is up to
governments to resolve the debt crisis through austerity measures and
reforms.
However,
many analysts believe such a move now represents the only way to stem
the contagion, despite the potential risk of inflation from printing
money.
Short Respite
Traders
said the ECB bought Spanish and Italian bonds on Wednesday, but the
respite was short and there was no sign of a change in its policy of
limited, stop-go purchases to calm markets temporarily while maintaining
pressure on governments.
Fitch
Ratings warned it might lower its "stable" rating outlook for U.S.
banks because of contagion from problems in troubled European markets.
But didn't Fitch here what Fed Member Bullshitterard
said??? What's the problem? Are those Fitch guys reading BoomBustBlog
now??? Tired of the HPA non-sense (as in [residential] housing perpetual
price appreciation). Yep! Those guys from Fitch justified their AAA
ratings on Bullshit based upon the concept of prices in housing
increasing at XX% per year, FOREVAAAAH!!!! You thought I forget about
that, guys???
Back to CNBC's article...
The
size and mood of the rally, the first big protest in almost a month,
will signal just how bitterly a restive public will fight further tax
rises and spending cuts that international lenders demand in return for a
massive bailout.
Greece's
main conservative leader Antonis Samaras has refused to bow to EU
demands for a written commitment to the bailout program and called for
elections in three months to restore social peace.
New
data showed that Greece's austerity-fuelled recession had widened the
budget deficit in October, the government failing to boost revenues
despite unpopular new taxes.
ECB
President Mario Draghi has said the 17-nation currency bloc will be in a
mild recession by the end of the year, making it tougher for
governments to put their finances in order, and Europe's debt crisis is
also increasing strains in the money market, the plumbing of the
international financial system.
Euro
zone banks are finding it harder to obtain dollar funding. While the
stresses are nowhere the levels of the 2008 financial crisis, they have
continued to mount despite ECB moves to provide unlimited liquidity to
banks.
- advertisements -
Unicredit is done, BNP next.
Notice how quickly the bond % ramps went from Greece, to Italy, and today to Spain and France?
Not much time left.
Thanx Regggg for all you do.
When do you ever get it?
The Germans will not allow to print nor the Dutch, Italians nor anyone half sane in Europe. Printing does not help anything.
The printing is going to start at that moment when the US forces stationed in Wiesbden just around the corner of the ECB in Frankfurt are taking over the ECB building.
It is very clear what is the problem in Germany and other well managed countries in Europe. They do not follow orders as we expect There has to be a regime change. These Germans are a threat to democrazy and all peace loving individuals on this planet.
Signer Obama, President of the United Sucker Association of the world
You are probably wrong. Austerity for the eurozone is probably much better for the US than ECB printing.
Judging from the size of the budget deficits which the Federal Reserve so far seems to able to finance it should be possible for the ECB to loan all the money the eurozone countries need directly to the member countries at low interest rates without causing hyperinflation, provided that the EU would make payment in euros for imported oil mandatory. But that would make it more difficult for the world economy to absorb as much dollar printing as in the past. So my assessment is that the US prefers more austerity in Europe to more printing, especially if the ECB changes its charter and if payment for oil in euros becomes mandatory.
Red. Red ink.
Invest in Italy! Long rope and Lamp posts.
Great Reggie
Trillion Dollar (Euro?) Question... how long has Europe got?
It's all been going very fuking pear-shaped recently (interest rates, failed auctions etc) and looked like it might collapse as early as this week until ECB started buying up Euro Bonds this morning to keep the zombie market propped up a little longer.... how much longer?
two years minimum
Chairman Bernanke is monetizing since how long? Draghi has not even started, in comparison
but hey, think about how much you can stack in two more years!
How long do ya need? Everything's flexible down the rabbit hole ya know.
I really like Reggie's style but the cummings-esque printed word placements are vexing to read.
reggie does a great job and can do much better.
http://expose2.wordpress.com
I clicked on the link thinking you had a Reggie-translator, something that would cut the number of words in half, clean up the screwy sentence construction, and use more words I understand. Nope. But I keep hoping for something like that...
Hey, this is the link you're looking for - SUBSCRIBE NOW!
Smart ass is as smart ass does :-)
+1
Reggie, you are perfectly right on France being the keystone, kudos
I'm still skeptical if you really see the whole picture, though
I think I wrote a few times in the comments that you don't envision what kind of "typical european" responses a French crisis could generate
it is not that long ago that France, Italy and in part Germany had seriously strong capital controls, for example
as American, you equate them with total dictatorship - here it's slightly different